How to successfully exit a business

Many entrepreneurs start a new business with an exit in mind. Some people rarely think about selling their companies until circumstances dictate or an opportunity presents itself. No matter what approach you take, it will be one of the most important financial transactions of your life.

This needs to be considered carefully, and in particular you need to be clear about your reasons for doing so. Potential buyers will want to know your motivation for selling. You should also think about how you might sell, whether to another company operating in the same or similar sector, to a private investor, or through a management buyout.

From partnership to sales

In 2001, Simon Squibb started agency Fluid Design + Marketing in Hong Kong with creative talent Helen Griffiths. They saw an opportunity in the post-dot-com digital space. Brands can learn how to leverage the gap left by the collapse of many dot-com companies to build a digital strategy for their business. Fluid has successfully attracted major clients such as CNN, Credit Suisse, and Estée Lauder.

In 2016, Squibb sold the agency to PwC, allowing it to offer the agency’s digital capabilities to clients. At the time, he had no intention of selling. He said: “It started as a partnership and became a sale. We didn’t have a target buyer in mind, but in my opinion, it was the best way to go.”

It took approximately 12 months from the initial expression of interest from PwC to the acquisition, and the sale was completed without the assistance of Squibb’s experts. He said: “From day one, I made sure that our business was financially transparent and that our business processes and systems were easy to understand. This eliminated any red flags along the way.”

What was frustrating for him was that news of the sale was leaked to the media early on. “As a founder, I wanted to break this narrative myself,” Squibb says. “But this often happens in high-profile deals within the industry, even if it nearly causes the sale to collapse.”

His advice to other entrepreneurs planning to sell their business is to sell when you don’t want or need to sell. “This allows us to sell at the price we want,” Squibb says. He also insists on bringing in a management team who can replace your role within the company once the deal is agreed. “This ensures that you are not locked into a long-term income,” he says.

Preparation is key

At age 31, after selling two of his executive search firms, Ben Dortis launched his own M&A advisory business, PCB Partners, to find the right types of buyers in the IT services, marketing and HR services ecosystem. advises on how to attract entrepreneurial businesses.

His advice is to not focus on potential sales, focus on creating the best business in your field, and the rest will follow. “Set your USP clearly, deliver great results for your customers, and surround yourself with the best talent you can find,” says Dortis. “This maximizes the chances of a successful exit at the right time.”

He says one of the biggest mistakes sellers make is not being ready to sell. They often bring things to market too quickly, creating difficulties during the due diligence process and ultimately destroying value. In some cases, it can even lead to the collapse of the entire deal.

Other factors that can significantly impede a sale include differences in shareholder views and objectives, and the owner’s inability to track financials closely enough and, as a result, fail to meet those numbers during the sale process. For example,

Dortiz further adds, “Build relationships upfront with potential buyers and investors in the market to ensure that the acquiring company has something complementary to your business, such as a company’s geographic footprint, customer service, and balance sheet.” It is important to make sure that we bring

As with Simon Squibb, it is possible to sell successfully without expert advice or support. However, Dortis believes that preparing well in advance and enlisting the help of a trusted corporate financial advisor are the keys to a successful sale. “A financial advisor understands your equity story, crunches the numbers, maps the market of competitors and potential buyers, and makes sure all paperwork is in place, including contracts,” he says. It will help confirm that.”

what buyers want

Selling a business is about more than just money, but it’s helpful for sellers to know how potential buyers approach acquisitions and how much their decisions and expressions of interest affect price.

Gabriele Ciparrone, a partner at British private equity firm Apax Partners, said: “Price is an important factor.” “Buyers are looking for opportunities to invest in businesses that have the potential to grow in value over the course of their investment. For Apax Funds, this means looking for hidden gems. With strong fundamentals companies operating in attractive areas, but have not yet reached their full potential.”

Many external factors can affect future sales, such as economic conditions. An uncertain macro environment can affect valuations, funding availability and access to capital markets. Technological disruptions, such as the development and potential impact of AI artificial intelligence and regulatory uncertainty, are also factors that could impact sales results.

Nevertheless, as we have seen in the recent economic downturn, companies with strong fundamentals and operating in attractive markets are highly resilient and always in demand.

“To reduce the impact of external factors on future sales, entrepreneurs can maintain a dialogue with experienced investors who know their sector well and have a strong track record across business cycles. ” says Ciparone. “Such investors are able to recognize the essential nature of the company, conduct efficient due diligence, and minimize the risk of failure in the sale process, even in difficult market conditions. I’m sure you can.”

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