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We are frequently asked, “what does an exit ready business look like?”.
This article introduces the seven key factors which affect value in the eyes of an acquirer and what a business prepared for exit looks like. It also reveals how you can assess how ready your business is for exit.
For some private companies, an exit may not be an immediate priority, but for venture capital or private equity-backed technology companies there almost certainly has to be a plan for an exit in place over a sensible timescale.
In the perfect world, you as a business owner would choose the perfect moment for your exit – when your sales are growing, your team is settled, your data room is full of clean, perfectly organised and prepared documentation; there is competitive tension from several ‘suitors’, and a premium valuation is therefore attainable.
For most, however, this is not the practical reality. Quite often, an approach comes because an acquirer has a need when you are not quite ready, or an unexpected event hastens an exit.
We encourage our clients to be prepared for an exit from early-stage. Everything required to prepare for an exit is also required to run an efficient and profitable business. Time and money spent preparing for exit is an investment in your future even if that future does not equal an imminent exit.
What does ‘ready for exit’ look like?
Experience has shown us seven key factors, which affect value in the eyes of an acquirer, and these seven areas of the business need to be considered in the preparation process.
To help you understand what a business, ready to exit looks like, we’ve written a white paper How Ready is your Business for an Exit White Paper where we define what ‘good looks like’ from the eyes of a prospective acquirer.
How to know how ready your business is for exit?
Now that we have tried to define what good looks like why not have a look at our Readiness Evaluation Tool to see how ready your business is? We built this online questionnaire-based tool to provide you with greater insight. We ask 30 questions in total that cover areas from your market to succession planning.
After completing this questionnaire, we’ll provide a personalised view of how your business model readiness ranks against the seven value influencers as well as buyers expectations for your sector. We will also identify the key factors to be considered when preparing your business for exit.