Lightbulb Session Summary: Exiting without stressing, does every business need an exit strategy?

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After the significant impact the pandemic has had on the world, individuals and businesses alike were left reeling from the economic repercussions in the midst of the crisis. Though now there seems to be improvement and many sectors are reaching pre-pandemic levels, the recent impact of COVID-19 is something that won’t soon be forgotten and whether you’re thriving or struggling as a business, recent events may have given you a broader perspective on having a potential exit strategy. 

In the newest exciting Lightbulb Session, hosted in partnership with haysmacintyre, Natasha Frangos, partner and head of corporate at haysmacintyre, got together with Christopher Kenna, talented entrepreneur and CEO and founder of the Brand Advance Group, to discuss the value of an exit strategy in every business.

“2021 global Mergers and Acquisitions activity has reportedly smashed the previous record for deal value which was achieved in 2017, with technology taking centre stage and private company targets accounting for more than half of the total volume and we certainly saw many clients through an exit event last year. The three to five year exit plan is something clients discuss with us all the time,” says Natasha, “but does everybody need that exit plan?”

Christopher begins by touching on the difficulties of attachment to a business and how talk of exit can have an impact, perhaps why some are less inclined to come up with a watertight exit-strategy when they should: “When you’re really into your business, you’ve founded it with part of your body, mind and soul, there’s a lot of talk about exit when all you really want to be is in it,” he says.

Agreeing with Christopher’s perspective, Natasha poses an interesting question, asking: “Are there certain milestones that should be achieved prior to an exit to enable a business to obtain its highest valuation and attract the most suited buyer?”

Despite his passion, Christopher realises sometimes the time is right and continuing to run your business could potentially be a hindrance to your longer term goals as an entrepreneur: “The reality is, sometimes it’s the right time for the company,” he says, “sometimes you need some cash and the company is stalling a little bit and you want to get over that milestone.”

Natasha adds that the right buyer may open up the business’ ability to achieve its growth strategy and maximise its potential. 

Another insight shared by Christopher is his realisation during exit talks that , “sometimes people don’t give a damn,”, it may feel like what you’ve built and your idea as a whole is being nothing but undersold despite your thriving passion. Natasha adds this can sometimes be a harsh reality when going through a sale process and someone is looking at your business objectively from the outside but that can also mean they bring new ideas and the right partners will buy into the strategy of what the business can achieve.  

. There’s a lot of stressing in exiting, there are many factors to worry about and the deconstruction of your business down to nothing but numbers can be an upsetting process, especially as a passionate entrepreneur; it can feel very personal. CThe conversation led to discussing the merits of having a team to support the founder(s) through the process, internally as well as external advisors, thereby removing the founder from the front line as the negotiations and due diligence process unfolds.

Christopher himself cites acronyms as an especially important language to learn when meeting with investors and prospective buyers, “it’s almost like speaking a different language,” he says, “it’s good to learn what you can before the meeting so you’re not chasing your tail trying to figure out what was being discussed 10 minutes ago.” 

Natasha herself describes these deals as “all consuming,” though shares some advice for effectively reaching the light at the end of the tunnel: “Momentum is important in those deals,” she says, “everyone needs to be hands on deck and available.’ The duo also emphasised the importance of preparing for the process; doing as much as possible ahead of time, in terms of tidy financials, forecasts, contracts, strong management team, thereby minimizing the risk of skeletons being uncovered during a sale process which could adversely impact valuation.  

Despite the potentially stressful process of investors primarily looking at financial value, Christopher and Natasha agree there are many looking to buy up a business that are mindful of the other important aspects. 

Despite some taking on the profit-focused approach, in a world where business is rapidly having to adapt to address a variety of social issues, especially in a world made ever-more conscious of those problems due to the recent crisis, what’s in the mission statement can be just as important as what’s on the annual returns.

Commenting on some of the key takeaways of the session, Christopher says: “Get yourself in the right frame of mind, not just commercially prepped, but mentally prepped. As a founder you’re going to speak to people who aren’t as passionate, or who don’t really get it, you’re going to have people who pick everything apart.”

“It just helps having a bit of a head start, getting your house in order beforehand and getting all the documents lined up,” finishes Natasha.