As the founder and leader of a digital/ technology business, there will come a time when you would need to consider how you are going to exit the business. Your aspiration may be to sell your business to a large tech firm and get a financial reward that you deserve.
However, as the UBS Investor Watch 2018 report highlighted, 48% of business owners don’t have an exit strategy in place. This may be because they don’t know how to prepare for their exit or they think that their exit is too far into the future for them to plan for it now. As a result, when the time comes for them to exit the business or when they get approached for an acquisition, they rush the process and fail to realise the true value of their business.
It’s vital for you as a digital/ tech business founder to have a robust exit plan in place. This will enable you to prepare your business for your exit and ensure that you get the maximum financial reward for your investment.
To help tech entrepreneurs and founders of digital businesses, we’ve written a series of blogs on exit planning for business owners. The blogs cover the triggers of exit planning, five exit strategies for business owners and the four Critical Success Factors for exit planning. The critical success factors that ensure you get the maximum value for your business and make a smooth exit are:
1. Business valuation - this allows you to benchmark your current business value so you can put plans in place to reach your target value before exiting the business
2. Optimise the levers of business value creation – by identifying and optimising the six levers of value creation, you can maximise the future value of your business
3. Create a strong management team – a team supported with good governance and management processes reduces dependence on the owner of the business
4. Develop a team to execute the plan – set aside resources (internal/ external) to execute the plans that focus on driving revenue growth and deliver operational effectiveness, to ensure you maximise the value of your business.
When is the right time to start planning for an exit?
In our view, you need to begin preparing for your exit when one of the key triggers of exit planning come into play. We advise you not to rush the process as this could increase the risk of a poorly executed exit plan. In order to have a smooth transition, you need to allow yourself 2-3 years to successfully implement the process and get the maximum value for your business.