For many entrepreneurs and business owners, building a company is just the beginning. Planning for a successful exit, whether through mergers and acquisitions consulting or another form of transition, is a key part of long-term strategy. Forming the right strategic partnerships can significantly accelerate both growth and the route to exit.

There are two fundamental ways in which strategic partner partnerships become excellent exit opportunities. Opportunity one is that the more holistic, and the more you can capture totality of market opportunity, the better.

If you’re doing part of the supply chain, you’re partnering with somebody higher up the supply chain to become a more complete service or offering. That’s beneficial, because you become – either as an individual business or collectively – a more complete solution.

It takes away the risk or need to use competitors, which thrusts the business forward on a multiple. There’s a lot of cross population within that, all of which are tremendous growth opportunities.

Be able to demonstrate growth

One of the most critical components of a successful exit is the ability to demonstrate clear growth and client retention.

The biggest factor for an exit is demonstration of growth. Momentum is key. You need to demonstrate that you’ve got momentum when you’re on a growth trajectory and demonstrate stickiness with your clients.

If you haven’t got a full-service offering, then in our experience, partnering with others to create a full-service offering is a really strong idea.

The second is fairly obvious. You have an opportunity for some form of industry, sale or transaction without management buyout, whether the entity you’re partnering with buys you, whether collectively you have become stronger together, that means somebody buys both of you.

What else should I know about strategic partnerships?

Beyond creating a more complete service offering, advantages strategic partnerships bring to exit scenarios range from direct acquisition potential to significantly enhanced valuations through increased scale and reduced risk.

Size and scale are particularly appealing propositions within exits. Valuations of startup and early-stage scale-up will be small multiple. When you get too sophisticated, larger entities typically are far higher multiple.

Two and two doesn’t equal four in exit, two and two can often equal 10, because you’re a different, more sophisticated, more mid-tier audience that is prepared to engage at a higher multiple because there is less risk.

I suppose that’s three things rather than two, but they would be my immediate recommendations for actions that improve your trading performance, which in turn is going to help exit.

Matthew Hayes is the managing director of Champions (UK) plc.

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