We took away 4 lessons valuable to both angel investors and business owners at almost any stage of development:
- Selling a business is just one strategic option for a founder, but it is an important one. For companies with outside investors, it is a choice the founder has probably already made. In fact, experienced angel investors will assess exit plans before saying yes to an investment.
- Successful exits result from lots of work over a long period of time. The effort takes an estimated 1 to 2 person-years with an experienced team, and “if a very smart CEO and CFO wanted to learn enough to do a reasonable job themselves, I’d triple the time estimate — at least.”
- Exiting from a business is a process, like sales or recruiting. The consequence of not thinking about exiting as a process is just the same as not thinking about, say, sales as a process — a business gets what it’s lucky to get, good or bad.
- Almost every company needs a team to manage this process. In fact, “the single most controllable factor in determining whether a saleable company will actually be sold is the capability of the exit team” charged with maximizing the exit price and ensuring that the eventual transaction closes. The ideal team is the CEO, an M&A advisor (our role, by the way), a small committee of the board, and legal and accounting professionals.
To learn more, call for our perspective on similar issues and how they apply in the Southeast.