Positioning a company for exit (it’s not just your strategy that needs work)

Believe it or not, the company you lead may not be yours forever.?

The curse of every founder and entrepreneur is also a blessing. Never being able to settle, always searching for the next big idea. Why do you think serial entrepreneurs keep doing what they do??

If that sounds like you, then sooner or later you’ll need to know how to position your business for exit. And that requires you to know the kind of exit you want.?

Every single one looks different. For instance, you might want to:

• Appoint a CEO
• Sell on the open market
• Sell to senior staff
• Sell to a competitor
• Pass the business to family or a close friend
• Liquidate the business

Each of these exits requires a different exit strategy.?

But you can’t just stick up a ‘for sale’ sign at your HQ and hope someone bites. In a conversation with Implement.io founder Noel King, we talked about the importance of positioning for exit. Because you don’t just need an exit strategy. You need a ‘positioning for exit’ strategy to go with it.?

Which looks a bit like this.?

Decide what you want

When you know what you want out of your exit, positioning yourself for it is 100 times easier. So figure that out first. Would you like to keep dabbling in the company? Sell off some shares and hang onto a little corner piece of the business.?

Are you hungry for cold hard cash that you can reinvest into a new venture? Consider liquidation. Positioning for exit is all about appealing to whoever or whatever the company is headed towards.?

SWOT up on your biz?

That subhead could almost be an album title. Instead, it’s a key part of your exit positioning. Run a SWOT analysis and refine your value proposition for potential buyers. Make sure everyone’s singing from the same hymn sheet, so that buyers who speak with different stakeholders don’t hear different stories.?

Highlight how your business has withstood risks and challenges before (ahem, a pandemic) so that potential buyers can see the resilience of your company.?

Decide who you want

If you’re passing the company over to someone else, in the hopes of still drawing a slice of the pie, it’s in your best interest to find the right person. And in general, if you’re not a dick, you’ll want the company to succeed anyway.?

Using your SWOT analysis, build a persona for the type of leader your company will need. Evaluate the type of leadership your employees' value, and explore potential buyers with different industry perspectives who can enhance your offering.?

For example, if you’re trying to grow your fintech platform, a buyer with a sales or customer service background could be the right choice.?

Polish your exit strategy

Your exit strategy will depend on how you choose to exit. Planning for IPO and planning for liquidation unsurprisingly require different approaches.?

But they should always include details of what happens to the company once you fly off into the sunset. That means paying your investors and making sure everyone has what they're owed. Before you make a dash for the door.?

Founders should think about their exit strategy from day one. I'm serious. Maybe it sounds morbid to you, saying goodbye to a company before you’ve even got it off the ground. But having an exit strategy in place from the get-go will help you protect your company, and make sure you’re getting the most bang for your buck once you depart.?

Your exit strategy can also - paradoxically - guide your growth strategy. Knowing where you want to end up, you can work backwards and decide the most efficient route.?

As you consider new pastures, make sure you get a valuation of your company. Having a clear idea of what your company is worth will help you position it for the right buyers.?

On the topic of cold hard cash, potential buyers will be interrogating your numbers. Minimise debt, or at the very least, make sure it’s justifiable. Provide a clear picture of your cash flow and profits to support financial projections.?

The big transition

No one likes goodbyes. But if you’ve actioned each of these steps, then whether you sell to a buyer, complete a merger, or pass the company onto a dear friend, the goodbye doesn't have to suck. And then you can say hello to the next thing.?

Gavin Fox is a Director at?Martinsen Mayer,?the tech recruitment firm VCs trust