So you’re looking for an exit strategy and the sale of your business seems like the best approach. But how do you get the most for the business you have built? Start right now preparing your company for a sale.
The good news for sellers: It’s a seller’s market. There are not enough assets in the world for the amount of investment banking cash that is sloshing around in the markets, as InterimExecs CEO Robert Jordan said in this recent webinar:
Private equity firms have a simple recipe for making money: They identify companies they believe are undervalued, improve those companies, then sell them for far more than they paid to buy them in the first place.
Knowing how private equity firms work can serve as a roadmap for any company looking to improve operations and maximize value.
Start with these 3 things PE firms do following an acquisition in the lower middle market ($2-$15 million in EBITDA) to improve your own bottom line, whether you plan to continue operating your business or want to ready the company for a future PE investment.
In years of pairing executives with companies in need, we have learned that there are times when full-time is too much time. That’s when companies benefit from choosing a fractional executive. It’s a way to get top-notch skills for a fraction of the time at a fraction of the cost of a full-time hire.
On a webinar, InterimExecs CEO Robert Jordan laid out the 5 situations when hiring executives on a fractional basis makes the most sense for companies:
Fractional executives are the hottest thing in the C-suite. Once a rarity, fractional executives have gone mainstream, especially since the pandemic. Companies across the spectrum, from start-ups to Fortune 500 firms, are considering hiring fractional or part-time executives.
During a webinar, InterimExecs CEO Robert Jordan took a look at the trend and some situations when a fractional leader might make sense for your company.
What is an interim executive? It’s a highly knowledgeable and deeply experienced C-suite executive ready to step into a company in need of superior leadership.
As veterans of the interim business, we know that pairing the right interim executive with the right company is a delicate balance. After all, private equity funds or venture capital funds get one use of their dollar. Just one. Fund managers have a sacred charge of evaluating opportunities and investing the funds they’ve been entrusted with by their limited partners in hopes of maximum returns.
Likewise, we get one chance to make a great match. We must identify the interim executive with the right skills and experience and catch that executive during the brief period of time they are in between assignments assessing the next opportunity they want to take on.
So how do we best deploy genius leadership when we only get one chance every day to maximize everyone’s time, unique skillset, and results? We start by being selective about our clients.
Cash flow mismanagement is a common problem among small and mid-sized businesses. But many owners do not have the experience to precisely pinpoint where cash flow mismanagement has occurred, nor the background to develop plans designed to counter those cash flow issues.
A typical small or mid-sized business owner can spend hours examining the company’s financial statement and nevertheless fail to see the underlying causes of cash flow problems, whether they be mismanagement of receivables, problems in pricing strategy, erosion of margins, escalating operational costs or other cash flow problems.
When it’s time to step away from the business you’ve built — because you’re ready to retire, you want to pursue another opportunity, or for some other reason — what’s the right way to exit your business?
The short answer is: It depends.
Here, we lay out five examples of exit strategies and look at who should consider each one.
The Roy family of “Succession,” the critically acclaimed series about which of the Roy family offspring would take the reins of the family-owned media conglomerate Waystar RoyCo., should serve as a cautionary tale for any business owner considering retirement. Business succession planning cannot be left to underlings to duke it out for control.
Succession planning is important for any business — family-owned or not. It’s critical for business continuity, preserving the legacy, and a smooth transition.
When it’s time to step away from the helm and choose a successor, there are three options available:
Choosing the person who will be your successor is the second step in this business exit process. The first step is identifying where the company will be when it’s time for the successor to step into a leadership role. Do you expect the company to be sailing along at an even keel, continuing to do what it already does so well? Or are there rougher waters ahead that will require more creative leadership?
Having a keen idea of where your company will be when you plan to step away from daily leadership is critical to understanding what competencies and skills the new leader will need – and to maximizing the worth of the organization as you convert your ownership interests into cash.
Once you have a good idea of that, it’s time to begin searching for just the right person to lead your company into the future.
And, a side note: Even if your exit strategy is to sell the company, you cannot skip this step! The buyer will want to know that you have made plans for a smooth transfer of leadership.
There’s bad news and good news when it comes to family business transition to the next generation.
First, the bad news: Only about one-third of businesses survive that transition. Here’s how the Harvard Business Review put it in a 2022 article: “In many family businesses, the tension between the eagerness of the next generation’s leaders to take control, and the founding generation’s willingness to relinquish control, is the source of many failed relationships and companies.”
InterimExecs CEO Robert Jordan takes a look at the challenges of family conflict in this lively 7-minute video:
Now, the good news: It doesn’t have to be that way. With a lot of planning, honest conversation, and realistic expectations, family businesses can survive and thrive for generations to come.
Here, we dive into the challenges of transitioning a family business to second-generation leadership and how to navigate those challenges successfully.
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First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
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