Having sold several businesses in the past we find ourselves being asked to provide founders and leadership teams with advice and guidance on their exit plans and strategies. Here are our top 4 tips.
Providing a solid foundation is critical. The process of sale either reactively or proactively is time consuming, distracting and if you are not careful can interrupt business as usual. Therefore, getting the foundation right in terms of accounting, governance, compliance, data and analytics are key.
Are you ready to be audited? Do you have the majority of DD requests already in place? Do you need to restructure or amend practices to maximise long term value? Do you own all IP?
The strategy is the heart of value creation and needs to be clearly articulated and well understood – consistently delivering growth, profitability and efficiency.
Do you have a strong growth plan? Do you have a clear understanding of your competitors? Do you know what your market is doing and how it is growing? Do you have a technology strategy that supports your strategy? Do you have a people strategy that fosters continuous improvement? Can you grow organically, or will acquisitions drive growth? Will you growth overseas? Do you have enough capital to support your growth strategy? Are you maximising profit? Do you have the data and analytics to support your strategy?
The Exit Preparation
It is crucial to know what the “right” exit strategy is. Unless you know what right looks like it is difficult to assess options.
Have you got your legal house in order? Is your board composition correct? Can it support the exit process? Do you have valuation metrics ready? Do you appoint an advisory firm or manage negotiations yourself? Do you know what the best form of consideration is? Are you prepared for due diligence?
The mechanism agreed for your business is critical in determining your ongoing involvement, earn our provisions and how your company will be integrated.
Do you have a clear understanding of your commitments post-deal? Do you have targets to meet? Do you need to support the integration? Will you need to change the board composition? Does your levels or accountability and/or responsibility change? Can you effectively monitor all provisions in your sale and purchase agreement to meet requirements?