Most growth companies will end up exiting via acquisition, either to a strategic or, increasingly, to private equity firms. In order to maximize your exit for your investors and team, you will want to be known to both types of buyers well ahead of time.
Calling an investment banker to run a process with expectations of a result in a 6-month timeframe is not a formula for success. The best exits generally require a proactive, systematic approach for years prior to an eventual exit that include identification of target acquirers, establishment and cultivation of relationships, and ideally some level of joint business development. All of this takes a lot of time that most busy CEOs don’t usually have as they concentrate on building their businesses.
Generally, the path to success is to get your business to the point where you have a top grade COO and/or leadership team in place to liberate you to invest the time and effort required to lead this corporate development effort. Another option is to engage a strategic advisor to take the lead on your most strategic relationships, and leverage your time to get in front of the right people at the appropriate junctures to evoke interest from your prospective buyers.
We recommend that you start preparing for your exit at least three years ahead of time. A typical exit plan will typically incorporate the following stages and tasks:
36+ months ahead of exit
> Growth strategy and mapping of growth vectors
> Review and identification of prospective areas and purchasers
> Review of relevant financial, market and industry information
> Assessment and feedback on sale readiness and prospective buyer perceptions
> Preparation of a prioritized target acquirer list, including perceived fit, acquisition history and financial strength
> KPIs and metrics review
> Establishment of the 3-year operating objectives
> Begin to court relationships with prospective investment bankers and review unique M&A valuation drivers and perspectives
12-36 months ahead of exit
> Target purchaser initial engagement
> Establishment of strategic partnership where applicable
> Introductory conversation coaching
> KPIs and metrics tracking and continuous improvement
> Establishment of the 1-year operating objectives
> Reduce investment banker relationships to those with whom you have the greatest fit
6-12 months ahead of exit
> Company preparedness
> Ongoing metrics tracking and execution to plan
> Investment banker selection process
0-6 months ahead of exit
> Confidential Information Memorandum (CIM) outline* and review
> Management presentation outline* and review
> Process staging and coaching*
> CEO and executive team coaching
> LOI evaluation and feedback*
> Terms review and negotiation*
> Due diligence preparation*
> Purchase and sale agreement review*
> Exit/merger integration planning and execution
> Company rebranding (if required)
* In collaboration with the company’s investment banker, as applicable.
As the CEO, you want to maximize the outcome for your stakeholders. We prepare and stand by you in your proactive exit planning to generate a successful outcome for your business. Contact us to learn more.
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My name is Alexander Rink. Drawing upon over 20 years of experience growing early-stage companies, my team and I help CEOs and Boards of Directors of companies from $1M to $25M in revenues identify and resolve strategic and organizational challenges to accelerate their company’s growth in a capital efficient manner.
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