A good exit strategy maximises a strong position – it shouldn’t be a way out of a weak position.
You want the best outcome from the time, money and expertise invested in the business – why wouldn’t you? So, the way you grow your business should be aligned with your exit strategy. When? How? Who? Trade sale? Family members? Outside investor? Management team? IPO? The permutations are many, but the basic principles of thorough preparation, correct route choice and the right timing hold good.
Preparation: keep the business in shape, with good contracts, a strong brand, excellent records and a committed workforce, not to mention consistent profitability. Know the potential counter-parties and aim to make your business attractive to them. Look at your business from a buyer’s perspective. Are you in more than one sector? Multiples in one of your sectors may be stronger than others – let’s maximise that. The synergy factor is also one to be maximise in order to plan for a strategic exit.
Route: choose it to fit your aims. For example, if you want cash and to leave the business, it may be a sale. If you want to realise some cash and stay on, while moving the business to the next level, it may be private equity. Or, perhaps, you have a legacy you wish to preserve.
Timing: good financials and prospects will create value, but there can be further value if a transaction is timed to coincide with the right economic conditions. Don’t start planning too late; plan in good time, for the right time.
Of course with exits, like many things in commerce, the devil will be in the detail. Whenever you start working with us, for long term growth or for an exit programme itself, we’ll have your chosen exit in mind so what you do now maximises what you receive then. Together, we’ll build in value, and tackle the financial and other details like taxation, regulation, contracts, policies and records so that improvements flow through the whole business. What you present, whether to a buyer, an investor or to family will be in the right shape for the right exit.
The future is to be created.