3 M&A Exit Strategies for Middle Market Businesses

When thinking about the exit of your business, sometimes the connotations can lean toward the negative. That certainly shouldn’t be the case. A business exit can be a very exciting, happy time for all involved – as the focus is usually on its continued growth.

Now, granted, you may not have always had an exit in mind. Since you opened doors, and since that first dollar showed up in your business account, your goal has been focused on all you can for growth and profitability. But life happens, things change, and your business evolved – and the truth is there’s going to come a time when exiting is the next logical, and healthy, step.

If you’ve started to feel that shift – your middle market business evolving to a new life stage that may not necessarily involve you – it’s good to establish an exit strategy right away.

Here are 3 of the most effective and potentially profitable exit strategies for middle market businesses:

1. Mergers & Acquisitions – Sell Side

In an M&A sell-side transaction, companies will be interested in buying yours. This interest may have arisen because you’ve established yourself as a leader in your field and they’re looking to acquire your talent, infrastructure or service offering. Or they’re looking to expand into possible new pillars of commerce, and they’ve identified your business’s presence in the market as the logical way to grow.

M&A Pros

M&A deals are a very strong option as an exit strategy. As the seller, you can essentially determine who gets to continue leveraging what you have created. And you can gain significant liquidity to help you diversify your wealth.

M&A Cons

This one – and simply because of its nature and the stakeholders involved – can be time-consuming and you do need to be prepared to relinquish control of the business.

Is this the solution you’re looking for? Destined can help with our sell-side advisory.

Click here to find out more.

2. Family Transfers

‘Keep it in the family.’ That’s the point to a legacy sale. And ‘legacy’, here, is the operative word. You’ve built something from the ground up – a successful, healthy business that’s made its name in the space you’re in. That’s a special thing. We know that when you’re ready to handover the reins, the decision isn’t something you’ll be entering into lightly. So, if you’re lucky enough to have family who are knowledgeable in the trade, and keen to take said reins, the family ownership transfer is a great strategy.

Family Transfer Pros

Apart from a loved one taking over – which can be ideal – if the business stays in the family, you don’t have to step away entirely. You can keep your connection to the business you’ve dedicated your life to building, and you can help ensure it moves to more and more successes.

Family Transfer Cons

The main disadvantage is in the absence of interested family members. If no-one’s willing to take on the challenge, there will be no big sale and liquidity event.

Is this the solution you’re looking for? Destined can help.

Click here to find out more about our family business succession planning.

3. Management Team Transfer

It’s often the case that in your business journey, there have been reliable, valuable and trusted colleagues at your side, every step of the way. If you’re thinking about exiting, they could be the one’s poised to embrace your legacy and make it stronger.

Management Team Transfer Pros

Transitioning your business to a partner or colleague is one of the best ways to ensure a seamless exit for you. They’ll obviously be highly knowledgeable in running the operation, so disruption will be minimal.

Furthermore, a trusted colleague will already be aligned with the vision for your business you established from the start. So even as you step down, your spirit within the enterprise will be reflected in theirs.

Management Team Transfer Cons

A little care must be taken when selling to someone that is close to you. You may be tempted to lower your asking price or settle for a mediocre sale just because of lessened objectivity. Remember, though, your business’s worth should be well-understood by a potential internal management buyer. And its profitability and potential growth will provide them with a strong foundation upon which to build, after all.

Is this the solution you need? Destined can help with our full consulting services on team transfers – we can help you to a successful ownership transfer.

Click here.

When is too soon to plan an exit strategy?

Well, it’s never too soon. And like we said, pinning down a business exit can be a very fulfilling and rewarding process. It’s simply a plan for the continued growth and success of your business as you move to the next chapter in your life.

Destined can help you map out that journey. If your vision is to sell your business to one that’s likeminded and ready to take it further, we can manage the entire M&A process for you. If you’re looking to hand your business over to a family member, we’ll show you how to set them comfortably at the helm. Or if you’re looking to transition your company to a trusted colleague, we’ll help you get the transaction that’ll be fair and lucrative for all involved.

Click here to find out more.

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