Exit readiness — from entrepreneur to seller

The central reason why exit readi­ness is so important for entre­pre­neurs is that

in their direct impact on the value of the company. Buyers evaluate compa­nies based on many crite­ria, inclu­ding finan­cial ratios, the stabi­lity of the busi­ness model, the risk of poten­tial liabi­li­ties and the market oppor­tu­ni­ties for future growth. Exit readi­ness ensu­res that all these aspects are presen­ted in the most posi­tive light possi­ble and that poten­tial risks are elimi­na­ted before the sale process. 

This has three posi­tive effects on the sales process: 1) a higher sales proba­bi­lity, b) a better sales result and c) a faster and smoot­her sales process. 

To ensure that exit readi­ness is targe­ted and tail­o­red to the needs of the selling share­hol­ders, a five-step approach is recommended.

The aim of the target defi­ni­tion is to deter­mine toge­ther with the entre­pre­neur how the company should be posi­tio­ned at the start of the actual sales process. What should be the focus of the thorough preparation? 

The moti­ves for the sale need to be clari­fied: Why is the company being sold?

Clari­fi­ca­tion of the expec­ta­ti­ons of the sale: What finan­cial or stra­te­gic goals is the seller pursuing? What purchase price is being sought? 

Presen­ta­tion about the future of the company. What is the vision for the company after the sale? 

Company valua­tion and analy­sis, wher­eby the aim is to create an over­all picture of the company’s situa­tion from the perspec­tive of a buyer and to take a holi­stic view of the company’s strengths and weaknesses.

Then there is the exit readi­ness road­map, which is a stra­te­gic plan that defi­nes the steps and measu­res requi­red to opti­mally prepare a company for a future sale.

The road­map is then used to imple­ment the indi­vi­dual measu­res. In prac­tice, many of these are imple­men­ted within the company itself, by the manage­ment. Exter­nal help then consists solely of track­ing progress and regu­lar sparring. 

Prepa­ra­tion of the sales process: paral­lel to the imple­men­ta­tion of the indi­vi­dual measu­res, it is advi­sa­ble to start prepa­ring the docu­ments requi­red for a successful company sale at an early stage.

Exit readi­ness is not just a one-off process shortly before the sale, but should be unders­tood as a conti­nuous opti­miza­tion process. Because even if the sale is not immi­nent, well-coor­di­na­ted prepa­ra­tion increa­ses the value of the company in the long term. 

Entre­pre­neurs who start prepa­ring for a sale early and syste­ma­ti­cally not only increase the chan­ces of a successful exit, but also maxi­mize the value of the company. A trans­pa­rent finan­cial situa­tion, effi­ci­ent proces­ses, legal and tax clarity and a strong manage­ment team are the corner­sto­nes of a successful sale. 

Dr. Willem Keij­zer is the foun­der and mana­ging direc­tor of CNX Tran­sac­tion Part­ners GmbH, an owner-mana­ged M&A boutique with offices in Munich and Amster­dam. Since 2010, he has been support­ing medium-sized entre­pre­neurs, share­hol­ders and inves­tors in the prepa­ra­tion and successful imple­men­ta­tion of corpo­rate tran­sac­tions. Prior to that, he mana­ged nume­rous projects in the areas of corpo­rate stra­tegy, digi­ta­liza­tion and opera­ti­ons for 10 years, inclu­ding for the BMW Group and well-known manage­ment consultancies. 

He holds a Master’s degree in indus­trial engi­nee­ring from the Tech­ni­cal Univer­sity of

Univer­sity of Eind­ho­ven (TUE), an inter­me­diate diploma in compu­ter science from the Univer­sity of Applied Sciences

Rotter­dam and a Dr. in Mecha­ni­cal Engi­nee­ring (Chair of Product Development)

of the Tech­ni­cal Univer­sity of Munich (TUM). — Willem is a board member of the German-Dutch Busi­ness Forum (DNG).

willem.keijzer@cnx-transactions.de