Becoming Exit Ready
A Ten-Point Plan
Adopting an exit-ready mindset equips entrepreneurial CEOs with the agility to seize opportunities, whether that involves investing time or capital in new projects inside or outside the current enterprise.
Achieving exit readiness extends beyond the simple desire to sell; it encompasses showcasing robust financial stability, crafting a clear exit strategy, and having a comprehensive grasp of the company’s value, considering both qualitative and quantitative aspects. This knowledge empowers the owner to navigate strategic decisions for the business’s future with confidence.
Preparing your business to be exit-ready involves more than just financial housekeeping; it requires a systems approach to enhance its value and attractiveness to potential buyers:
1.Setting Clear Objectives
Beyond the main aim of enhancing your enterprise’s value, it’s vital to ponder additional objectives pivotal to your perceived success post-sale. This might include preserving your culture, ensuring your team members thrive under new leadership, and possibly your customers or clients are looked after.
2. Thorough Preparation is Key
A more favourable outcome is often the reward for those who invest 12-36 months in meticulous planning for their business’ divestiture. Engage in comprehensive pre-sale due diligence, spanning operational, human capital, commercial, and financial aspects, to uncover potential value enhancers or pitfalls.
3. Adopt the Buyer’s Gaze
Understanding that the most fitting purchasers are likely willing to offer a premium, identify these candidates and understand their valuation criteria to tailor your business’s appeal, thereby elevating its market value and fostering competitive interest. Remember, the highest offer may not always align with your broader goals.
4. Make yourself redundant
A key element of a solid exit strategy is proving that the business can thrive without you. Crafting a succession plan, potentially through the appointment of a skilled CEO/GM and their team, is crucial to assure potential buyers of uninterrupted success after the transition. Our client experiences have shown that achieving this level of independence frequently diminishes the initial drive to sell.
5. Invest in Organisational Housekeeping
Commonly overlooked, the investment in streamlining your business affairs — from financial reporting to legal and operational risk management — is crucial. This effort not only enhances appeal but also simplifies the transaction process.
6. Harmonise Growth with Profitability
Every sustainable increase in your EBITDA markedly elevates your business’s sale value, with each pound contributing ‘x’ times the EBITDA based on your multiple. Strive for a two-year period to roll out and showcase initiatives that enhance profits, ensuring you simultaneously preserve or improve profitability as you pursue growth. Remember the ‘rule of 40’ as a guiding principle in this balancing act.
7. Demonstrate a Viable Growth Strategy
Potential buyers often place a higher value on businesses that demonstrate clear opportunities for future growth, whether through product innovation, geographic expansion, or the exploration of new market channels. Initiating such ventures can effectively turn growth prospects into tangible assets that appeal to buyers. Once a business reaches cash flow neutrality, its growth rate typically has a more significant effect on the sale price than profitability alone.
8. Safeguard Your Financial Gains
After the sale, your financial proceeds will be subject to taxes, highlighting the need for a strategic plan for personal taxation and wealth management to safeguard your post-sale assets. This strategy is essential for supporting your retirement and legacy planning goals.
9. Stay Agile with Market Timings
The volatile dynamics of the M&A market underscore that being perpetually prepared is your most valuable asset. By aligning your business to quickly respond to market changes, you can maximise both buyer interest and the valuation of your enterprise. This is the compelling rationale behind maintaining constant exit readiness.
10. Leverage Expertise
The decision to sell your business, a pivotal moment in your life, requires expertise and assistance, whether from a business coach or a corporate finance advisor. The complexities involved in the sale process are markedly different from everyday operational hurdles, highlighting the critical need for specialized guidance to steer through this intricate path.
Over the past nine years, we’ve helped numerous clients navigate successful exits. This experience underscores the value of a business coach in achieving and exceeding exit readiness. Our expertise is crucial in applying a ten-point plan effectively, ensuring your business is exit ready. Tap into our proven track record—engage a business coach to enhance your strategy and maximise your sale outcomes.
“
“Leading an organisation can be a lonely task and having someone like Dominic to bounce ideas, problems and opportunities off with the experience he has, is both invaluable and comforting. We have introduced a methodology into our UK business with Dominic’s help that has created a growth and measurement engine that we are proud of.In the time we have worked together our UK business has grown quarter on quarter revenues 40 fold and in the last five years at a larger scale, we have grown fivefold.”
– PAUL COSGRAVE
Global Growth Markets Cloud lead at Cognizant
“
“I’ve come across a lot of coaches in my career as a CEO and what makes Dom stand out is his no bullsh*t approach to business. It’s about candour and telling it as it is. That’s a style of coaching that I personally find to be incredibly constructive.
You can build a great business without coaching, but it certainly makes it a lot easier. Having somebody who’s not in the weeds of the everyday challenges of running a business giving you fresh perspectives is something incredibly valuable.”
– ROBERT BELGRAVE
Chief Operating Officer, PAX8
“
“I keep hearing “The first £100,000” is the hardest £100K, to be honest, every new £100K step is really difficult, especially when the only money you have is your own and that is limited. Over the past 20 years of running Clearvision, I can reflect back and see considerable changes in myself. Self-reflection has been an important part of my journey and without any shadow of a doubt, it is easier done when you have a coach you can confide in and 100% trust. I have been lucky to have Dominic as a coach.”
– GERAL TOMBS
CEO at Clearvision