There is no point waiting for an exit opportunity to merely arise. We report on why boosting your business’s profile prior to an exit will help reap the rewards.
There is no point waiting for an exit opportunity to merely arise. Mike Robson of Azure Partners explains why boosting your business’s profile prior to an exit will help reap the rewards.
A fundamental piece of advice that we offer to businesses who want to exit is to make sure that they build value before an exit event actually takes place. This may change expectations around timings, as value cannot be built overnight, but we believe it is the only way to both maximise the opportunities for an exit and to dramatically increase the final selling price.
A successfully engineered business exit, whereby the company is sold for its optimum price, can take up to three years, so achieving the ‘right price’ will require real commitment from the business owners. But in our experience, this commitment will invariably be worth it if the business proposition is sound and scalable.
The first part of the process will invariably involve making sure that the right foundations are in place; that the business is sound, operational and able to withstand the close scrutiny that will come as part of any exit due diligence that is required.
The next part of the process is much more important, and that is to create a sustainable and achievable growth trajectory that will enable the business owners to exit at the right time for that optimum price.
At the start of any project we always ask the business owners to assess themselves against ten key points, as our experience confirms that a successful business should be scoring at least seven out of ten against them.
This enables us to see the business in the round, and while no two businesses are ever entirely alike, the overwhelming majority will have a lot more in common in terms of the issues that they face, internally and externally, than they have in difference.
This self-assessment covers five core areas: strategy, market, delivery, people and finance.
First out is strategy; do they have a clear view of their future goals and how they are going to get there? Secondly, will be their market. Do they understand their market well and have products, which offer a clear competitive advantage?
Flowing out of this is; do they have effective delivery mechanisms – which will include but not be limited by the sales and marketing resource and capability? Then there are questions around people, which often generate a lot of heat, and finally finance, including the understanding of future revenues, costs and risks.
While the areas that we cover in this initial self-assessment may seem to be self-evident, time and time again we find that what should be ‘obvious’ to a business owner can be anything but, or equally it unearths issues that are known but not actually being acted upon.
This is in part because we find that a majority of business owners rarely afford themselves the opportunity to sit back and see their own businesses in the round – what is and what is not working – and what needs to be changed to really kick-start a new phase of growth to take them towards an eventual exit.
The changes that will inevitably fall out of this process will be consolidated into a road map for growth, with specific measurables and time lines, with the actual exit event set as the final goal. And then it’s all down to delivery.