Getting the right advisors on your team prior to exiting your business is very important. As you consider your options here is a heads up on the areas where an investment banker can’t help you and the areas in which they excel.
What Investment Banks Can’t Do (24 months prior to the sale)
- Make your value proposition into a compelling story.
- Find new niches for your expertize. We call it Red Zone thinking.
- Dilute customer dependency to ensure that no customer accounts for more than 10% of your sales.
- Ensure your lead generation is process driven, based on activity you know that works. The sales pipeline is aligned to all marketing initiatives.
- Build a reliable sales process that does not rely on recruiting superstars to succeed.
- Develop HR strategies to build a comprehensive management team to ensure the business is NOT perceived as a one-man band.
- Build processes that quietly lift margins each quarter.
- Tweak business models to produce sales annuity streams – supporting sustainable earnings growth.
- Transform the accounting records and operational systems to ensure you ace the diligence test one day.
- Build a metrics culture. The right stuff gets measured and actions are taken to correct.
- Develop a more aggressive approach to New Product Development. Ensuring that new products actually get launched.
- Build simple but effective internal training programs to show you can handle scaling your team.
- IP, patents, and trademarks are well documented.
- Your competitive positioning is documented over time. Reasons for your successes and failures are trapped.
What are Investment Banks really good at?
- Valuing your business. Giving you a realistic range of values achievable from appropriate buyers.
- Producing an Information Memorandum that summarizes why your company is remarkable.
- Producing additional information packs personalized to each shortlisted buyer bringing out the strategic advantage of owning you.
- Understanding the drivers that motivate buyers in your sector.
- Researching the most appropriate strategic and financial acquirers.
- Project managing a covert controlled auction to ensure confidentiality is maintained.
- Handling unreasonable requests for information from acquirers.
- Managing communication between acquirer’s and the shareholders of the seller.
- Assisting/leading negotiation of the terms of the deal.
- Structuring the deal to maximize your exit proceeds.
- Structuring the earn-out formula if appropriate.
- Identifying dangerous commercial issues in the sale and purchase contract (Clearly this will be one of the main tasks of your M&A lawyer).
- Closing deals in your sector at premium valuations.
- Or telling you to walk away from the wrong deal.
For more important topics for exiting business owners follow Exit Your Way® on LinkedIn. For a direct conversation give us a call @ 833-BIZ-EXIT (249-3948) or email us: email@example.com for a direct response.
Exit Your Way® helps clients nationwide increase sales, build value, prepare and sell their businesses for more money.
We help business owners realize more valuable exits because growth and preparation produces real results!