Window dressing a company for sale - a less obvious goal of management

Some of the “making money” goals are not so obvious.  There are two that come to my mind when I think of non-obvious goals – both connected with the intention to sell a company.

The first goal can be characterized by the phrase, “window dressing a company for sale.”  In this case, management is actually trying to do their best to pump up the metrics that would have the greatest impact on the attractiveness of the company to a seller.  This may or may not include profitability as outlined above.  A classic example might be the credit card companies or the home mortgage companies in the early 2000s.  They were both over-aggressively approving new customers with the aim of pumping up the number of credit cards issued and the number of home loans outstanding.  These numbers lulled a giant, like Bank of America, into the (now in perfect hindsight) massive mistake of overpaying for them and incurring untold legal liabilities!

The point with “window dressing” is to make the company attractive to a buyer.  Many things may occur in management practices that might make you pause in this construct.  Because you’re not privy to the actual objective of selling the company, some of the goals might seem incongruous.