Exit Strategies Workshop – Nashville

These are the videos from an Exit Strategies workshop at the Inc. GrowCo conference in Nashville.

GrowCo is Inc Magazines annual conference for high growth companies. This was a pre-conference workshop attended by about 100 CEOs and business owners.

Section 1 – 75% of the Time we Blow It:

  • Yes, I’m saying that 75% of the time when entrepreneurs and investors build a company that could have been sold we blow it
  • And fail to successfully exit
  • Keep in mind that this is anecdotal observation, not hard data
  • We still don’t have the hard data we need
  • What I know is that it’s far less than half and probably more than 10%
  • “Saleable” is also a matter of judgement
  • 25% is the best observational data we have
  • The good news is that I believe we can increase that percentage to 50% easily
  • What I hope to accomplish today is to provide you the take-home knowledge
  • To increase the probability that your companies have successful exits

Section 2 – Everything is Changing

  • We are living through an interesting time
  • The economy is changing – the whole world is changing
  • Many big parts of the financial ecosystem that worked for a hundred years
  • Don’t work at all anymore
  • The best and the brightest now work in startups
  • Big companies need to grow but they’ve lost the ability to innovate
  • So they are acquiring young companies at a rate we’ve never seen before
  • Most exits are under $15 million
  • Golden era for entrepreneurs and angel investors
  • Never before has it been so easy to create such valuable companies
  • Using so little capital
  • And sell them so early, for so much money

Section 3 – Every Company Should Have an Exit Strategy

  • It’s surprising how much of what you hear about exits is wrong – dangerously wrong
  • There are so many myths and misperceptions
  • And so many ‘experts’
  • And quite a few dirty secrets
  • This workshop is about what actually works today
  • Your exit is just another business process
  • The chances of success increase dramatically if you have a good plan
  • Companies should be sold, not bought
  • Optimum exits require strategy and planning
  • The exit strategy affects a surprising number of daily business decisions
  • You don’t have to be profitable to sell your company
  • You only have to “prove the model”
  • The Equity Effect and optimum vesting

Section 4 – Don’t Ride It Over the Top

  • An exit usually takes 6 to 18 months – from when you hire the M&A advisor
  • The internet has accelerated everything
  • Many companies are sold when they are only 2 or 3 years from startup
  • If a company misses the ideal time to exit
  • There is a significant probability that it will fail completely
  • There are several reasons why this happens:
  • 1. Over-investment by VCs
  • 2. Competition
  • 3. Intellectual property infringement
  • 4. Negative momentum
  • 5. Waves of Consolidation
  • Why an unsolicited offer is not usually good news for the shareholders
  • Like many parts of life, and business, “timing is everything” with exits

Section 5 – Questions

  • Patents are a double edged sword
  • What’s a reasonable fee and retainer for an M&A advisor?
  • How do you determine the optimum time to exit?
  • How can we tell if we’re near a wave of consolidation?
  • Will a more aggressive growth strategy improve my exit valuation?
  • Is there anything we should not do that might create a wave?
  • How can we protect ourselves from fast followers?
  • What should I do if an M&A firm calls to ask about buying my company?
  • How risky is it to offer our company for sale to a competitor?

The PowerPoint for this talk is online here.

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