How to Prepare Your Business for a Successful Exit
In Part 1, we discussed the key areas that impact your business’s valuation when it’s time to exit: strategic clarity, growth & execution, and leadership. If you plan to exit in the next 18-24 months, taking action in these areas will ensure your business is prepared for sale and positioned to achieve maximum value.
Here’s how you can take practical steps to improve these critical areas.
1. Strategic clarity: When preparing for an exit, buyers want to know if your business has a clear, focused strategy. They’ll look for strong evidence that you know exactly where you play in the market and why you win. Demonstrating long-term growth potential becomes difficult without strategic clarity, which can lower your valuation.
Here are some ideas to start with.
Identify and prioritise your target markets. Are you clear on which market segments deliver the most value? Focusing on these areas helps you invest your resources where they have the greatest impact.
Align your resources with your strategy. Is your team and infrastructure supporting the markets you’re pursuing? Misalignment or wasted resources on non-core activities will hurt profitability and reduce your business's attractiveness to buyers.
2. Growth and execution: It’s not enough to simply have a strategy—execution is key to creating sustainable, profitable growth. Buyers want to see that your business is growing and doing so in a way that balances revenue growth with profitability. Growth at the expense of profit raises red flags for buyers increasingly focused on economic profit—how well the business converts growth into sustainable value. One critical component of executing efficiently and innovatively is embracing digital technologies.
Here are some ideas to start with.
Balance revenue growth with profitability. Ensure that your top-line growth improves your bottom line and doesn’t come with unsustainable costs.
Diversify your customer base. Relying too much on a few key clients increases risk. Buyers want to see a diverse, stable customer portfolio.
Adopt digital technologies to drive efficiency. Implement digital tools in operations, compliance, and sales to streamline processes and reduce reliance on manual tasks. Digital transformation will help you scale more efficiently while improving transparency and compliance, both critical buyer concerns.
Leverage digital innovation to develop IP. Digital tools can help you improve your current operations and create new ways of working. Using technology to develop proprietary solutions or processes, you can generate intellectual property (IP) that adds significant value to your business and positions you as a leader in your industry.
Formalise your sales processes. Are your methods for attracting and retaining customers consistent and scalable? Implement repeatable sales processes that don't rely on your involvement.
Example: I worked with a technology business growing quickly, but its profits weren’t keeping pace with its revenue. We significantly increased its margins by refining its pricing model, streamlining its operations, leveraging digital technologies resulting in valuable IP assets, and implementing a scalable sales process. The business became more attractive to potential buyers.
3. Leadership: One of the most critical factors for a successful exit. Buyers want to see a leadership team that can run the business without heavy reliance on the founder. If the business depends too much on you, its value drops, resulting in potentially long earn-outs. Strong leadership adds to the company's stability and increases buyer confidence.
Here are four key areas to explore.
Evolving your leadership approach: The shift from being the operator who solves every problem to the leader who builds systems and empowers others to make critical decisions.
Developing your leadership team: Identify individuals in your organisation who can take on key decision-making roles. Buyers want to know that the leadership team in place will continue driving the business forward after you leave.
Delegating key responsibilities: If you’re involved in every significant decision, it’s time to step back. Gradually hand over key responsibilities to your team members.
Recruiting or promoting for succession planning: If there isn’t already a clear succession plan, now is the time to create one. This could mean promoting from within or hiring externally for a senior leadership position.
Life plan before business plan
Beyond the financial aspects of exiting your business,
aligning your exit with your personal goals is essential. Why are you exiting? What does your life look like after the transition? The best exit strategy ensures you achieve your financial goals and feel fulfilled in your post-business life.
I always encourage my clients to reflect on their personal life plans before finalising their business plans. Whether aiming for more family time, pursuing other passions, or focusing on individual health, understanding your personal goals is critical to shaping a business exit that supports your next chapter.
Taking action now
Preparing your business for a successful exit doesn’t happen overnight, but you have an 18-24-month window to make meaningful changes to maximise your company’s value.
Let’s connect and start mapping out a plan to ensure that your next phase leaves you financially and personally fulfilled.
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