Your exit strategy may be a painful thing to think about, especially if your company has been built up with your own sweat and blood – but when you do action it, it needs to be tied in with your growth strategy. You also need to think about potential buyers or investors for your company. In the previous blog posts, we’ve looked at how outperforming the market contributes to your exit strategy. In this one, we’ll take a look at some tips for building a company that someone will want to buy – solidifying your exit strategy in the process. Below are three tips.
Consider who will want to buy your company
This is inevitably tied in to accelerating company growth and outperforming the competition – you want the person buying your company to be someone who can continue to invest in it and take it to the next stage. In an ideal world, you’ll be the Instagram to Facebook’s takeover (US$1billion in 2012, net value now US$102billion, not the Tumblr to Yahoo’s acquisition (US$1.1billion in 2013, last sold to Automattic in 2019 for a reported US$3million). You’ll want to show consistent revenue growth, consistent profits, and consistent increase in clients, customers, or subscribers, depending on your business model. But of course, plenty of companies with these factors also get bought and don’t replicate this success…
The key here is replicable processes – that is, processes that are shown to work and can be easily repeated. Think back to the social media giants listed above. All three of Facebook, Instagram, and Tumblr have grown from adverts, but only the former two were able to replicate that into monumental growth, with the latter unable to incorporate adverts seamlessly into its structure. Building processes into your business that can be easily repeated and adapted also makes it easier for incoming buyers to understand how to continue growing it. Not only that, but if you decide you personally want to close the door completely behind you – not so much as an advisory role, even – then replicable processes are much more beneficial for the future than building a ship that only one captain can sail.
Prove that you can continue to scale
In conjunction with replicable processes, proving that you can continue to scale is key to getting the right buyer. The old adage that the sky’s the limit isn’t quite true – some niches are after all, destined to remain niches. But understanding how your company operates within that niche and demonstrating the elements of that niche that you can continue to grow in, the elements that remain unconquered, will bring in interest. The value for a potential buyer is in growth – how much of their investment can they see returns on.
The best kinds of buyers will see not only your company but the potential to grow it, delivering them returns on their investment. Building your exit strategy around finding such a buyer is an excellent tactic.
If you want to accelerate your company’s growth and maximise the value of a future exit then contact me ASAP to arrange an initial free and confidential call.
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