When it comes to selling your business, optics matter.
This week we dropped an interview with Kiran Merchant, an aviation consultant who was passed over for an $8,000 promotion so decided to start MAv, an aviation consulting business. Within two years he had millions in contracts, 12 employees, and an acquisition offer representing a high single digital multiple of his EBITDA.
By all accounts, Merchant offered a great service but a sizable portion of his success can be chalked up to optics, the marketing practice of intentionally framing the way people see things.
To begin, Merchant recruited seven retired aviation experts to work with him on an hourly basis. They were not salaried employees and they would only work when required, but Merchant positioned them as part of the senior team in talks with customers, characterizing the MAv team as having 250 years of collective experience.
Kiran then approached Aeroport de Paris (ADP), one of the largest aviation companies in the world, about a possible partnership. One thing led to the next and the partnership talks turned into an acquisition offer from ADP.
ADP’s offer was probably reasonable for an eighteen-month-old consultancy, but Kiran demurred. Instead, he laid out his vision of the future of the aviation infrastructure market as a $105 billion opportunity. He positioned MAv as ADP’s on-ramp to the largest aviation market in the world as well as their combined unique value-added proposition for the US Aviation market. Eventually, ADP increased their offer.
The business hadn’t changed. it was how Merchant positioned the company for ADP, in other words, optics.
As a condition of its offer, ADP insisted Kiran get his client’s agreement not to use the acquisition by ADP as an excuse to nullify their contract with MAv. Kiran approached his clients and changed an important word in his positioning of the deal: instead of using the word “acquisition” which to some meant that Kiran would be riding off into the sunset with his pockets stuffed with cash, he characterized the acquisition as a “merger” for his clients. The word “merger” implies a coming together of two companies to create a great force — a more appealing message to clients who had a lot riding on their contracts with MAv, creating a win-win-win for everyone involved including MAv clients.
Optics matter in the high-stakes business of selling your company.
📽️ Clip of the Week
In this clip, Kiran shares how he got ADP to increase their offer.
💬 Quote of the Week
“I’m selling you $105 billion worth of infrastructure and consulting work. I’m not selling you what I’m making.”
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🏆 Merchant’s Creative Pivot
Kiran Merchant celebrated his success with MAv in a unique and fulfilling way. Without opting for a trophy, he immediately embarked on a new venture after his time with MAv. He founded Merchant Creatives, delving into the world of theater and film. His plans include directing off-Broadway plays and working on a feature film slated for 2025.
📈 Deals
- Vyrsa Technologies, a company known for its development of minimally invasive treatments targeting chronic pain in the sacroiliac joint, has been acquired by Nevro, a specialist in pain management medical devices. The terms of the acquisition stipulate that Nevro will pay $40 million up front, with an additional commitment of $35 million in milestone payments. With Vyrsa’s revenues estimated at around $7 million in 2023, the deal values the company at over 10 times its current revenue.
