Exit Execution Workshop – Philadelphia

This was the first presentation of the new Exits Execution workshop I developed for the Angel Resource Institute. I’ve been a fellow at this institute for many years and contribute new educational content as often as I can.

The Exit Execution workshop was first presented at the Angel Capital Association Annual Summit in Philadelphia on May 9, 2016.

Part 1 – Only 25% have Successful Exits

  • The Exit Execution workshop complements the earlier Exit Strategies workshop
  • This is what you need to know to start the exit process
  • Only 25% of saleable companies successfully exit
  • Most owners sell for less than they should have received
  • Many have no idea they left millions of dollars on the table
  • This is an anecdotal observation – we don’t have hard data
  • Unfortunately, we won’t have the hard data any time soon
  • Even if we had the data, the world is changing too quickly
  • We have to learn from anecdotal observation
  • Which is why meetings like this are so important

Part 2 – Accidental Exits Case Studies

  • Three recent case studies that I have permission to share
  • Vineyard Networks
  • Exit before the first year-end
  • Pre-revenue software company looking for strategic investment
  • The common theme is that these were fortunate circumstances
  • About half of exits are “accidental” – more luck than strategy
  • Just imagine how many exit opportunities we miss
  • Companies should be proactive not reactive
  • Optimum exits require strategy and planning

Part 3 – What Does This Mean For You?

  • My goal is to provide you the take-home knowledge and skills
  • To increase the probability that your companies have successful exits
  • It’s surprising how much of what is said about exits is wrong
  • There are so many myths and misperceptions
  • And quite a few dirty secrets in the industry
  • This workshop is about what works today in our current economy
  • Companies should be sold, not bought
  • The exit is just another business process
  • The first step is your “Exit Strategy”
  • It’s critically important that you check the alignment

Part 4 – Exit Timeline

  • Often the biggest question is “How long will it take?”
  • The short answer is 6 to 18 months
  • Part 1 – Before Talking to Buyers
  • Part 2 – Building the Sales Funnel
  • Part 3 – The Bidding Process
  • Part 4 – Negotiating and Closing
  • When to tell the team
  • Managing CEO deal fatigue

Part 5 – How Much Work Is An Exit?

  • A good estimate is 1 to 2 man-years for an experienced team
  • If a very smart CEO and CFO wanted to learn to do it themselves,
  • I’d triple the time estimate – at least
  • How the time invested affects the final price
  • And the probability of closing a transaction

Part 6 – The Exit Team and What It Will Cost

  • The probability of selling depends on two factors
  • Saleability includes many factors
  • The most controllable is the exit team’s capability
  • The ideal team
  • The M&A advisor’s functions
  • Why CEOs should not lead the exit
  • Selecting your M&A advisor
  • Every deal needs a very good bad guy
  • M&A advisory fees
  • How fees correlate to quality and affect price
  • Legal and accounting fees

Part 7 – Your Probabilities of Success

  • One of the dirty secrets is how often transactions fail
  • There are no statistics and nobody talks about this
  • The most likely reason for failure is “seller communications”
  • One firm said publicly that only 8% of attempted exits close
  • Some good firms brag about their 30% success rate
  • The most controllable factor is the quality of the M&A advisor
  • The lawyer can also make or break a transaction
  • It’s hard to describe a “save” if you haven’t seen one

Part 8 – Maximizing the Sale Price

  • There are many ways to maximize the price, a few are:
  • Increasing the growth rate
  • Structural value increases
  • Capitalizing on inefficient markets
  • Illuminating strategic value
  • Maintaining multiple bidders
  • Sales and negotiating skill
  • Can you really get 50% more?

Part 9 – Case Studies and Valuation Examples

  • Complete exit case studies are very rare
  • Most transactions are covered by Non Disclosure Agreements
  • The Parasun Case Study
  • The Brightside Case Study
  • The Pacinian Case Study

The PowerPoint for this talk is online here.

3 thoughts on “Exit Execution Workshop – Philadelphia”

    1. Thanks for asking, Bernard. I’ve developed workshops on exits for several organizations. This Exits Execution workshop in Philadelphia was for the Angel Resource Institute which is a non-profit associated with US Angel Capital Association in America. I’ve also developed two similar workshops for the Angel Academy which is the education arm of the National Angel Capital Association in Canada. The international workshops were sponsored by organizations focused on education for either angel investors or entrepreneurs, or both.

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