Managing a successful exit strategy
By Jana Klimecki, co-founder and director, Tyler Mangan
According to recently unveiled data from Prequin, the exit market is soaring as private equity firms sell an unprecedented number of companies, with a record 309 sales worth more than $120bn in the second quarter. Delivering a successful business exit strategy depends on a variety of factors such as market dynamics, the organisational financial situation, organisational performance and performance of the management team - some of which can be influenced whilst others cannot. All of these factors, however, drive valuation at exit.
P
reparing for a sale/exit is a time consuming and often lengthy exercise. Developing the business case, preparing numbers and forecasts, and undergoing in depth due diligence and sales negotiations force a stern focus
around ‘getting the deal done’ from sellers and buyers alike. In today’s difficult, unpredictable and somewhat erratic economic climate, it
is particularly challenging to ensure an alignment of sellers and buyers around sales valuations and developing vendor confidence in future business growth. These pressures often result in reduced management attention on ensuring the business is robust in its day to day operations, as well as how it plans for the future. The focus on getting the deal done often comes at the price of having less bandwidth for preparing what will ultimately make the deal work once the sale goes ahead.
As an organisation, we have worked with over 30 management teams undergoing some form of
ownership transition over
the last two and a half years, and each of these management teams faced their own unique challenges. However, teams that proactively prepared for the sales process by developing the management capabilities and infrastructure to lead their people through the sale and ensured the business was set up to succeed within the new ownership structure, have by and large achieved higher valuations at exit and performed better post-completion of the deal.
“The focus on getting the deal done often comes at the price of having less bandwidth for preparing what will ultimately make the deal work once the sale goes ahead.”
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