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Grooming your Business to be Acquired – Part 4

by on July 30, 2013

We Can Do ItWelcome to Part 4 of the Grooming for Exit series where I address HOW to Implement the Grooming Strategy to enable a successful exit of your business.

In Part 1 I addressed, So What is Grooming ?  In summary, it is preparation to enable you, as the Founder, CEO, an Investor, or part of the Executive Management team, to take advantage of the Right Deal to come your way, with the eventual sale of the business done quicker and at a higher valuation than would have been the case without Grooming.

In Part 2 of the series I discussed When to Begin the Grooming Process.  If you’re thinking about it, generally the answer is NOW and it essentially entails completing an initial business diagnostic.

In Part 3 I discussed what Specific Steps to take to properly groom your business for a successful exit.

And in this, Part 4, the finale of the Series, we look at how to implement the grooming strategy.

How do you Groom the Business?

So how do you groom the business?  It is not a one time event, it is an ongoing process that requires focus and discipline to ensure that the progress you’re making carries through and after the sale of the business.

The Implementation Process

The Implementation Process requires a disciplined approach.

  • You need to have a change management process in place to ensure the vision and plan are implemented.
  • You need to stay focused on the exit.  It’s easy to get sidetracked but time is flying by.  You need to stay focused.
  • Focus on your value drivers.  We discussed these in depth in Part 3.  These will drive your valuation.
  • You need to hold your management team accountable and your grooming process will affect your incentive plans.
  • Finally, its important to recognize the personal objectives of your stakeholders.  Your investors will have their own objectives as will your management team.  You’ll have to balance all of that with your own objectives.

Working in Partnership to Build Value

It’s important to create a balance among all of your stakeholders to ensure they’re all working together in partnership to build value for the company.

The teams needs to commit to being and staying focused on a rigorous implementation of the strategy.

It’s important to find leaders with hands-on experience to ensure your business is being groomed properly.  It may be worth looking to hire a Super Temp or renting an executive. Highly experienced executives may not be attracted to company or those leaders that you need most may not find you attractive as a full-time employer.

Sometimes it helps to have an external facilitator to maintain focus.   This facilitator will play a key role to ensure momentum is sustained throughout countdown to exit.

Being Ready to Take Advantage

Keep in mind that by constantly grooming your business you will be ready to take advantage of the right opportunities at that right time.

You’ll have implemented changes to ensure your business is performing well.

You’ll have your house in order making it easier to engage with due diligence.

And you will address any legal issues to ensure there is no significant outstanding litigation or other serious legal issues that would impede or negatively effect your valuation.

ConclusionChoice

So in Summary:

Grooming is an iterative process that should be part of your ongoing strategy.

It affects your mindset, it keeps you focused, it impacts your incentive packages, and it requires everyone on the management team to work together.

Ensure you groom far enough in advance so it doesn’t become obvious to anyone that the business will be for sale.

When a buyer comes along it will be very distracting.  You need to ensure that the fundamentals of the business are solid so that the process doesn’t derail the sale.

Finally, grooming is just good business practice.

p.s.

If you’re wondering how you build a company that you can sell for a premium in a few years, contact me to discuss the Valuation Amplification Process.

I also invite you to download the white paper and learn How to Quickly Increase Your Valuation – A Proven 5 Step Process.  http://www.therevenuegroup.net/free-offer.html

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