5 Tips for Creating an M&A Exit Strategy

As entrepreneurs that have seen some success, you’re the ones living the dream.

You had a business idea. You planted that idea as a seed. And you’ve cultivated that seed from shoot, to sprout, adjusting, making decisions, guiding it toward the ultimate vision – a business that’s like a majestic oak, with branches that spread, and roots that stand the test of time, as your legacy.

Perhaps for many of you, though, the culmination of the dream will be the reward of selling your self-sufficient organization for millions of dollars, to a party that will honor the business’ heritage, and build it ever upward.

It’s certainly an achievable vision – all you need is a solid strategy.

Destined is made up of like-minded entrepreneurs that have achieved their own destiny, so we have some top tips on how to develop your exit strategy for a successful sale.

How Should I Plan My Exit Strategy?

It’s not about selling ice to Eskimos.

You’re proud of what you have built. You know the worth of your business. You can envision your company in the right hands.

So, it’s all about making sure potential buyers see that too. It’s about getting them to buy-in to that vision, as they buy you out.

Consider these tips:

Demonstrate a Healthy Business

Potential buyers will be looking, with understandably prying eyes, at your business’ bottom line.

Remember this shows potential buyers how healthy your company is each year. This includes not just your EBITDA (earnings before interest, taxes, depreciation and amortization) but also a review of your balance sheet and contingent liabilities.

Tighten the Books

Building buyer confidence in your business, will probably boil down to the books. The bullet has to be bitten, then, and the dreaded audit of your finances must be done.

The necessity of this is that your cards are on the table – full disclosure – for your prospective buyer to view, so that they can match what they’re looking for with your numbers to give them confidence in the accuracy of your reported and projected revenue.

Undergoing an audit will also do a lot to quash the fear of the process. You’ll know what to expect so that the word ‘audit’ holds less of a monstrous weight.

Keep Those Closets Clean

Due diligence will be a requirement for any buyer.

This means they’ll want to snoop around your figurative closets and backrooms, to find anything that may be a potential risk to the buyer.

But in business, things can hit the fan, and skeletons of the past can still be rattling around back there.

The best course is to solve what you can in anticipation of the sale, and for everything else, again, full disclosure is key.

Know Your Growth Potential

Any prospective buyer will have growth potential in mind – your business’s ability to strategically scale within your industry, and possibly into unexplored sectors will be critically important.

Investing in growth initiatives leading up to a sale will do a lot to reveal your business’s scalability.

Increase efforts to maximize sales, grow your teams, branch into potential new revenue streams – anything to show the agility of your enterprise.

Ask for Help

The mergers and acquisitions sell-side mission isn’t trivial.

For a successful sale, many complex components must be identified and deftly handled, because it’s your business that’s going to be scrutinized.

Asking those who’ve been there and done that, is a sound move toward a profitable sale.

Destined can help.

We’ll guide you through the life-changing experience that will be your M&A exit strategy – because your success is our success.

Click here to find out more about how we can help you keep living the dream.