The Exit Window: Are You Ready?

Much has been written about the unprecedented amount of capital, otherwise known as “Dry Powder”, currently under management by Private Equity firms. These firms are feverishly looking for the right deals to invest their ammunition. Over the past few years we’ve watched EBITDA floors drop and multiples rise as the window for these PE firms to invest their managed capital narrows.

A few years ago my firm was asked to conduct a break-out session on Exit Strategy for the “fastest growing companies in America” at the Inc. Magazine National Convention. We assembled a panel of Private Equity experts as well as former owners of a company who had recently completed a successful exit.

Exit

I was a bit surprised when the doors opened and over 250 company owners poured into our small room, filling every seat and most of the aisles. We made a short presentation then offered an open mic for questions. In our post-session debrief, we made two observations from our panel’s interaction with the company owners:

  1. Exit Strategy is top of mind for many company owners – industry neutral
  2. Company owners need help to prepare their company for a successful exit

My partner, Doug Tatum, makes an interesting observation about the primary motivation in the capital market…

The Money from The Benchmark Button on Vimeo.

Are you considering an acquisition for your company in the future? If so, is your company “Exit Ready”? Do you know how to reduce a PE firm’s perceived risk on your company so that you can eliminate due diligence barriers and take advantage of those unprecedented multiples?

You’re wrapping up Q4 2014 and preparing for launch into Q1 2015. What better time to get your partners in the same room and discuss these essential operational questions that cover the risk factors most Private Equity firms want to eliminate in their portfolio companies:

  • Is our Leadership Team strategically aligned?
  • Is our Leadership Team accountable to performance?
  • Can our Leadership Team state the same, clear Value Proposition?
  • Does our CEO delegate responsibility effectively?
  • Does our company have the right executives, with the right experience, in the right positions?
  • Does our Leadership Team prioritize, allocate resources, and execute effectively?
  • Does our company utilize an effective and accurate Economic Model that enables us to forecast performance effectively?
  • Can our company identify it’s greatest risk and do we manage that risk effectively?
  • Does our company have adequate capital to fund growth going forward?

One of our local entrepreneurs, Peter McAlindon, Ph.D. founded a successful tech business in the gaming industry. A few years ago he presented a report to his Private Equity firm that answered the “risk” questions about his company. Here’s a quote from Dr. McAlindon that he offers to fellow entrepreneurs…

“The Private Equity firm said that they had never seen anything like The Benchmark Button report, and that it reduced their perceived risk of my company. I received the money I needed.”

If you want to sell your company now or in the future, and want to prepare the most profitable exit, then contact me for a complimentary Benchmark Button report (benchmark-button.com) for your company. Get Exit Ready so you can grab your share of the Dry Powder.

Brent Sapp, CEO Inc. Navigator, brent@incnav.com.

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