Grow & Exit
Why it matters?
Wealth generation for a company owner requires three acts of leadership, each with its focus and direction.
Make money – build a business that generates organic growth to release your time to focus on next-level growth
Grow money – identify and implement next-level growth initiatives that accelerate revenue growth and deepen profitability
Protect money – lock in the 5 levers of value to secure a successful, premium exit that monetizes years of dedication, care, risk, and investment.
While we spend 10-15-20-30-40 years building a business to generate income that we reinvest to win greater returns and a premium sale and exit, 94.6% of companies started fail to sell. They close at a high cost to the business owner, their family, and employees. Of the 5.4% that do sell, 68% make significant concessions on value and the terms of sale, eroding the value of legacy.
What goes wrong?
Job not an asset
Every business develops through stages. In the early days, income generation is vital. It relies on activities that trap you in an income generation mindset and habit, preventing your company from generating income without you. In effect, this makes your company a job, and a job is not salable. To be sold, you must build your company into a tradable asset meeting 3 criteria; income growth, capital growth, and independence of the business owner.
Not built for sale
Planning – Businesses are not bought; they need to be built to be sold. There are only 2 destinations for any business: a sale or closure. Not planning your eventual exit prevents you from understanding how an acquirer buys a company and what you need to do to build one that meets those requirements. By not developing the 5 levers of valuation and exit in your business today for that future event reduces your salability and puts you on the back foot of a price taker should a buyer make an offer.
Time runs out
Being caught up in daily, weekly, monthly operational activities traps you in an operator mindset. This prevents your progression to an investor mindset allowing you to build for a sale instead of building for simply income generation.
Time – too much time caught up in your business’s daily, weekly, monthly activities prevents your ability to switch hats from operator to investor. It also impedes your ability to understand the investor/acquirer mindset and then act to build a product they’d want to acquire. Time scarcity often appears in comments like “I will deal with it when I’m ready to sell.”; “I’m too busy to focus on this right now. We’re putting out fires, which takes all my time.”; “I don’t need to plan. I get letters all the time from potential buyers so that selling will be easy.” and”I’m not ready, so planning isn’t necessary.”
Only 2 destinations
Valuation – the circumstances leading up to a sale event are less strategic and more circumstantial, including moribund or low growth, a significant work effort or investment requirement to maintain and sustain the business, burnout, health, boredom, and relationship pressures, amongst others. This motivates a valuation approach driven by a business owners emotion and necessity, not math. And valuation is very much about math. Five levers or variables influence the valuation of a business and the terms of exit. Waiting for the event that drives a poorly planned exit to occur prevents your business from being ever-ready for a premium exit.
By building an Asset of Value today, you can have your cake and eat it tomorrow. An AOV meets the criteria of a tradable asset, locks in the 5 levers of value, and places you in a position to sell in the future
We will work with you
- Diagnose your Asset of Value status and see what gaps need to be closed to achieve the exit state that would best achieve a premium price and clean exit
- To set the growth and exit goals that would see your business deliver the 5 levers of valuation and exit
Working with you and your team, we will:
- Position your business for growth to inspire future acquirers
- Develop a simple, transferable growth system to make it happen without you
- Upskill and empower your team to drive the growth system
- Secure organic and next-level growth outcomes to build confidence on how an acquirer can achieve a return on their investment
- Meet all the Asset of Value criteria to increase your ability to sell successfully
- Build the body of evidence to demonstrate the 5 levers of value and exit to maximize your valuation and simplify your terms of exit and payment
A business built into an asset of value allows you to have your cake and eat it. Should you wish to exit, and opportunity to do so a premium valuation on acceptable terms and conditions. Should you delay your exit, your business will be positioned for growth, enabled by a simple, smart growth system operated by a purposeful team. The results will see organic growth and next-level growth initiatives grow revenue while deepening profits. Ultimately, the years of risk, investment, and sacrifices can now be monetized or sweated further to maximize exit valuations or wait for optimal exit timing.