Case Study - Exit planning
Updated: Oct 3, 2018
The founders and investors of a company had a desire to exit the company after building a successful business over a 10-year period. Both the founders and investors realised that an exit would need to be carefully planned over a period of 1 to 3 years and needed to get their house in order and demonstrate that the business would provide the necessary returns to the owner in due course.
In order to deliver value to the owner the business would need to demonstrate that its continued growth was sustainable, and that the business would ultimately not be reliant on the founders’ involvement. The business further needed to demonstrate that it could deliver to a business plan and was fully aware of the relevant key performance indicators (KPI’s).
Management reporting to date had been sufficient for the needs of the business, but if the ultimate owner was a large company then it would require significant development to become a bit more sophisticated. Furthermore, the reporting against KPI ethos within the company would need to be developed.
De Novo Partners were brought in to the process early and helped the founders and investors pull together a plan to ultimately achieve the exit at a value that exceeded the original expectations.
De Novo Partners helped implement new KPI’s and the reporting structure. Having these in place for a year or so prior to the actual acquisition allowed the owner to look back and see how the company and team were meeting the targets and monitoring progress. These KPI’s were valuable for the acquirers going forward as it allowed them to get to grips with the business.
De Novo Partners helped the team pull together a data room that the owner could access during due diligence. Knowing what the owner would need ahead of due diligence was an important part of the transaction and ensured that there were no last-minute surprises. A good data room also gives the acquirer a good impression and lets them know that the company knows its space.
De Novo Partners works closely with a group of professional advisers and was able to leverage these relationships to bring in people with excellent track records in the required areas such as legal, accounting and corporate finance.
The company ultimately sold for a sum that exceeded the founders and investors plans in a period of just over 2 years. The transaction went smoothly and there were no surprises. The owners had the mechanisms in place to monitor the business going forward and had confidence in management reporting. Key employees remained involved.