Creating Your Exit Plan
The first step is to understand which field you are playing on...
Each exit path has unique preparation and value creation conditions. Optimizing for these conditions can take from months to years to maximize what you hope to get from the business. For example, in a sale transaction EBITDA is a critical consideration, but in a merger transaction market positioning or IP may be more important. There are 16 key KPIs each of which may be optimized slightly differently depending on the likely exit path your company should take. Selecting the most likely exit path for your company involves a five-step process to evaluate the likelihood you can optimize the KPIs for any desired path.
Exit Value Planning
The second step is working with an advisor that will get the best possible outcome. My process is done in partnership with Stoney Hill Advisors. Stony Hill strives to maximize the value of your company by offering services like our Business Scope 360 Consultative Session, our RealValueTM Pricing System and our Exit Value Planning service. Our advisors have a unique approach for an exit value plan. Our Business Sale Planning Program results in written goals for the transition of business ownership and control. We consider all the factors in place when coming up with a strategic exit value plan specific to you and your company. We coach you and monitor your progress as you increase the value of your business.
Our Process
The exit process will likely take six months or longer. There are several steps in the process:
- It begins with the advisor’s due diligence process, which can take a month or more.
- Preparation of marketing materials: (a “book” and supporting detail) can take weeks of drafting and reviews.
- Initial acquirer approaches which, with responses, will take a month or more depending on the time of year.
- Lots of initial meetings between the company and potential acquirers. If there are several possible suitors, this process can take a month.
- Acquirer due diligence, which will take a month or more.
- Offer or offers and attendant negotiations.
- Acquisition document negotiation. This can take a month or more for larger acquisitions.
- Closing.
If the exit is an IPO the steps are similar to the above but the process is much more rigorous and the costs involved are run into the $millions.
Formats for our coaching services
A large amount of information needs to be assembled to support any liquidity process—sale, merger, or IPO. Here is a list of the major information areas.
- Financial Information—Current and projected and including capital structure
- Products and Services—Descriptions, current and future, market position, customer concentration, etc.
- Customer Information
- Competition
- Marketing, Sales, and Distribution
- Research and Development
- Management and Personnel
- Legal and Related Matters
We guide you through this process in its entirety for an exit strategy that is most valuable to you.