During the next three years many companies across the globe will come to market to exit with the help of an Investment Bank and most will be disappointed with the results. Many will receive an underwhelming offer, many will not receive any offer at all, and many will fail due diligence. The main flaw in the existing exit process is not the quality of the investment bank or the lack of tax planning or the number of years in business. The problem lies in a vital missing set of steps. We call it the Value Creation Gap.
The Reimagined Exit Process contains a Value Creation step to plug this gap. We define this in 3 distinct ways.
- An audit & exit roadmap – to structure the path to exit – 90 days
- Strategic Repositioning – to accelerate revenue growth – 90 days
- Operational Enhancement – to build efficiency and scalability – 15 to 24 months
The Reimagined Exit Process asks private company owners to do something different. It demands they look through the lens of a buyer! (as outlined in our complimentary Exit Playbook). Only by taking this approach can the owner of a private company hope to realize a life’s work. Looking through the lens of a buyer exposes the inherent value leakages throughout your company. Don’t be confused with a “valuation” of your company and whether it’s saleable. Practiced acquirers are in the risk mitigation business. They don’t want to buy leakage. They are considering the post-acquisition integration challenge before they even meet you. Serial successful acquirers are imagining your company under their ownership. Here is what Value Creation looks like close up:
An audit & exit roadmap
- A buyer’s assessment is conducted to examine issues that buyer cherishes. We call it our Saleability Test. We’ve fined tuned it over decades after it was first published in 1998! It’s a careful review of your business covering 15 key criteria that buyers care about. The output of this test shapes the operational priorities over the next 2 years or less. It produces a new “Report Card” that aligns priorities and builds value.
- An analysis of the M&A landscape is conducted to achieve a deep understanding of the strategic rationale of acquirers in your sector both financial buyers and strategics.
- Together this gives management a fresh strategic prioritization and plan.
We conduct these over 90 days which gives us a runway of 15 months to 24 months to execute the conclusions alongside your management team or you could push on with no outside help.
Strategic Repositioning – to accelerate revenue growth
The next phase involves three key elements:
- Brand strategy development. Creating a unique positioning in the marketplace as outlined in Ted’s book Branding For Buyout. Influenced by what buyers cherish, shaped by where the market is going and leaning into why your customers keep coming back.
- Campaign development & execution that resonates with customers.
- Ongoing KPIs and optimization.
Finally based on this knowledge and remarkable positioning we execute.
Operational Enhancement
This is where you are prioritizing fixing the results of the audit and taking your new story to market. Leakages are addressed. Dependency on legacy products, dependency on the owner or dependency on a few key customers can be value destroyers. Weak processes, misaligned technology, poor morale, lack of strong growth, weak margins can all add up to disappointment on exit.
Instead, operational enhancement done well:
- Standardizes processes and documents your playbooks.
- Optimizes marketing, sales, operations, and finance as an aligned collaborative team.
- And as you scale a Data Room is created which allows you to ace due diligence one day if you so choose..
That is the new Reimagined Exit Process, and we will be sharing our best practices at an event near you over the next six months.
The Portfolio Partnership and the award winning brand agency The Grist are active in several sectors executing our new process with clients.
Ian@TPPBoston.com to start a discussion.
