Recently, Simon Property Group, the biggest mall operator in the United States announced a deal to partner with a Silicon Valley start-up, Shopkick Inc. Shopkick is a company that has created technology that will reach out to Smartphone-equipped shoppers. It is one of many companies that have developed technology aiming to perform similar types of functions. The technology is relatively new and will become pervasive in the near term. Simon's objective is to reward Smartphone-equipped shoppers for walking into its shopping centers by sending discounts and promotions to the Smartphone.

My reason for pointing out this business transaction is that it is a little unusual. Typical sale transactions happen between an investor and a seller of a business or between a strategic purchaser and a seller. Usually the strategic purchaser is one in a similar business or one that is either upstream or downstream in the supply chain. There are generally operating synergies in the strategic transaction.

The Simon Property Group deal falls outside of the usual because Shopkick Inc. would likely be considered a provider of marketing or technology to the mall operator. When I read about the transaction, it strengthened my belief in a phrase that I use all the time; "We don't know what we don't know."

In this case, it confirmed that the strategists looking for a partner for the Silicon Valley firm did a great job in stretching the boundaries of their search. They looked beyond the typical strategic and financial buyers for one that has synergies because they would be a significant user of the product.

Simon will begin using the product almost immediately and hopes to roll it out to 100 of their 370 malls within months.

Most transactions involving small to medium-sized businesses take place when either the owner contacts a competitor and opens up sale discussions or when a strategic buyer targets competitors as a method of gaining market share, reducing competition or gaining a supply line. In those situations the seller often locks themselves into single buyer negotiations without the benefit of knowing what others might offer for the business if it was widely marketed.

Typically, business owners and managers are good at operating their business. Directors of large enterprises understand that selling a business requires different skills than those for running a business and for that reason we read about investment bankers being hired to sell many of the corporations that are household names. Yet, when most owners of small to medium-sized businesses decide to sell, they undertake the responsibility themselves. Frequently, this results in a loss of concentration on the business. In many cases, the owners of small to medium-sized businesses do their best to emulate the business strategies of large corporations but not when it comes to hiring investment bankers.

Statistics show that most business owners have up to 80% of their wealth tied up in the value of their business and yet they are willing to sell without trying to find out what they don't know. What we don't know is what the Board or partnership or individual is thinking as to how a business like yours would be a great addition to their business or investment portfolio. Generally there are always buyers for a good business; you just need to find the right strategy to seek out the best buyer.

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