By Sankeetha Selvarajah
Today's issue is brought to you by Zensei LLC. We help high achieving entrepreneurs get clear on their growth by planning their exits in a mindful, systematic process. This week we look at the market, and the acquisitions that we can learn from. Sign up for our Zensei Group Accelerator with our discovery call here. Our October Accelerator is closed.
How to Play Chess like your Buyer.
Dear Exiter,
Chess players have a habit worth stealing.
Before every move, they ask what the other side is trying to do.
This week's acquisition spotlight gave us a good board to study.
On October 5, C.H. Robinson announced it will buy RXO, a fellow freight broker, for about $5.8 billion in cash and stock which is a 29% premium to RXO's Oct 2 close. Simply put, each RXO share gets $17.25 in cash plus 0.0856 shares of C.H. Robinson.
Why it matters for you:
Exit Term you should know: A premium is the extra a buyer pays above what the market says something is worth today.
Why pay it?
Because the buyer did the math and told us the answer: about $300 million in annual cost savings within two years of closing. (That's a synergy: the savings or gains a buyer expects from putting two companies together.)
That's the buyer's valuation, not the seller's.
Don't gloss over this: The buyer named its own number! About $300 million in annual cost savings within two (2) years. That is how a buyer decides what a company is worth.
Candidly, this is what most owners miss.
Owners value their company by what it earned.
A buyer values it by what it will earn inside their house. If they can't see where the savings or growth come from, they take the guess out of the price.
You don't need to sell a $5.8 billion company for this to apply.
A $5 million company has a synergy story too: the competitor who'd love your customer list, the larger firm that needs your trained crew in a new city, the buyer whose back office could absorb yours.
Notice the timeline, too.
The deal isn't expected to close until the first half of 2027, and it still needs regulatory approval and an RXO shareholder vote.
Even a deal everyone wants takes months.
Plan for that.
Action Steps for the next 14 days:
- Write down your three (3) most likely buyers and one sentence on what each would save or gain by owning you.
- Pick one (1) item on that list a buyer can't currently see in your numbers or contracts, and put it on paper. Make it visible.
- Ask your M&A attorney or advisor: "What would a buyer discount my company for today?"
Looking forward,
Sankeetha
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