The Exit Plan : M&A Market & Strategy

To budding as well as seasoned entrepreneurs, the ultimate end game is to build a business from scratch and then to either take it public or sell it for a handsome amount. Every entrepreneur has the basic qualities of diligence and desire, but not every entrepreneur can see their plan come into fruition. Before you can even think of a viable exit plan, you need to spend months to years of strategic planning and perseverance. There is fierce competition in all the sectors, tech or non-tech, and what is vital to the success of your exit process is taking right steps to position your business for a really well-timed exit. We will discuss some ways you can achieve a successful exit strategy for your company.

Things to Remember

Smart leaders know their limitations just like they know their strengths. When it comes to limitations, they are open to look elsewhere for guidance. Big egos or pride has no place in business. It is possible to achieve success through your own efforts and trial and error, but why not take the wisdom of others who have tread before you? If you want to institute and then execute a coherent exit strategy, you must engage with both existing and prospective advisors and mentors. Network and cultivate relationships with important professionals who are working within the relevant space. They will help source investors and connect your business with IPOs or M&A experts, which again will enhance the chance for a successful exit.

Though the company shareholders, management, and leadership have a common interest most definitely, their goals and expectations for the realization of a vision are not always perfectly aligned. This is why before any potential exit can be realistically considered, it must be adequately vetted. The initial pitch should ideally include the exit strategy, and the latter can be tailored as and when the business grows. If there are any changes to the plan, voting shareholders must be aware of them, so that everyone is in the loop to execute the plan completely, and so that potential problems can be avoided.

Generally company leaders have a specific plan in place for a lucrative exit, but you should always examine other options. For example, when it may seem like an IPO is the best way to take, you may be missing an opportunity because you fail to evaluate a potential M&A. As soon as the company begins taking shape, make sure that this examination commences. This is critical for your startup to get a financially rewarding exit. If you incorporate solid planning during the early stages of existence, it is ultimately good for you.

In the end

When it is time for your business ownership to change hands, you must be well positioned for the exit planning process. Make sure money is not left on the table. And the answer to this problem is that you should realize all of your desired goals. Smooth transitions result only when the current ownership understands the need for change. Next, the accomplishments to be achieved need to be defined. Once you understand what drives price, you can exploit opportunities in order to improve outcomes.

You can prepare catalogs describing your company, action plans, and value extensively, or you can go for an approach that is simple, direct and action-oriented. Do a detailed SWOT analysis of the business and your findings will tell you what will enhance the value of your business. This will again help your business to undergo a smooth transition to the new ownership and management. You can even chalk out detailed action plans so that the weaknesses and threats can be eliminated and strengths and opportunities can be exploited further.

Different buyers will value your business differently. An exit is generally said to be successful when it involves a massive payout. However, sales prospects often disappoint some company leaders, because of a lack of understanding with regards to valuation, and the manner in which it is normally calculated. A common misconception states the investors will be enticed only with a steady revenue stream. This is not the case. There has to be a strategic plan along with a sustainable business model.