Get 6 Time More Money for Your Business Today

From the outside, some businesses seem successful but on the inside there are cracks that appear more clearly when the shareholders have different needs from their business value. Your business may reflect some if these issues too. Here’s how you can apply what one business learned to your business today.

Specialist Technical Services Company Discover Their Ideal Exit at 6X Original Value 

Where did they start from? 

Having established the business in 2012, the owners knew their business had reached a crossroads.  One shareholder was looking at retirement whilst the other “had another 20 years” in them.  But they didn’t know what options they had to enable everyone to get what they want. How can one extract the value out of the business to fund his retirement without forcing the other to sell his shares when he wasn’t ready. 

The first step was already taken. They hand over some of the day-to-day activities with the appointment of a Managing Director.  They are very conscious that their business relies on specific skills and technical knowledge. Attracting and retaining key staff is always going to be a challenge. 

Disappointing Business Value

The business value doesn’t reflect the future potential of the business. There is too much reliance on the founders and the initial valuation is very disappointing.  There are significant gaps in the governance and operational functions of the business which make it unsaleable.  Profits are inconsistent, which means there is a lot of focus on short term cash flow. This leads to a heightened sensitivity to risks.  There is very little  time and effort spent on strategic thinking and lots of “short-term” reacting. 

What happened? 

The initial EXIT READINESS assessment identifies a programme of improvements to the company structure, processes and management team.  This immediately starts to add value.  By working with the senior management team, the business starts to improve. This results in better engagement with the employees. There’s an increase in transparency of where the shareholders are taking the company and what the business goals are. 

Owner Reliance

The shareholders are directors and do day jobs in the business.  There is a lot of confusion between when they are doing their job or turning up as the owners.  These 3 roles (Owners, Director, Employee) are defined and responsibilities identified.  This makes it easier for the new MD to get on with doing the job he is employed to do rather than second guessing the shareholders, which is increasingly becoming a problem. 

Clarity of Roles

With clarity on roles and decision making the MD stepps up to grow the business. He takes advantage of the work done before him to build a pipeline of opportunities for continued expansion.  Additionally mentoring support of the MD and the owners gives both parties the opportunity to explore the developments in their relationship without creating tension. 

Communication

With clearer communication between the owner and the team, we execute an Exit Options workshop which allows the shareholders to explore the possibilities and consequences of several exit strategies.  Getting under the skin of the owners needs and wants for their personal outcomes is applied to the business. This allows the shareholders to devise a plan that works for both, their staff AND the business. 

The Result? 

At the start the shareholders are confused and frustrated that they have got themselves into a situation that felt like they have to both sell the company for one of them to achieve what they want i.e. retirement and retirement funding.  Leaving the other with no business and having to either start again or possibly become an employee in the company under different controlling ownership.  This is not attractive. 

Clear Plan

Now they have a clear plan.  The roles of shareholder, director and employee are clearly defined for both.  They put in place appropriate protection for their shareholding, including a shareholder agreement that fits their needs, a buy/sell agreement and some protection insurance.   

The method of extracting value for each of them is understood and the timeline is agreed.  Both shareholders get what they want, having been more open about their individual requirements and desires.  Neither wants to compromise the other, and no compromise is needed when everything is explored. 

Employees

They both want the employees to share in the success of the future business while extracting the value they have built to date.  Yet they have never had this conversation with each other.  They now build in an Employee Ownership model that engages their team to reduce any retention issues in a market with a severe skills shortage. 

An additional benefit is the growth and strength of the MD in the main leadership role.  Greater clarity of decision making within the business helps all employees to participate in the business at all levels.  The business becomes more values-led, with better communication and transparency of goals.  The whole company is involved in the improvement of the business leading to better results and greater retention of staff. 

Operationally the business doubles in revenue, becomes consistently profitable AND increases in value by a factor of nearly 6.   

Yes, 6X the value in less than 3 years. 

All the stakeholders are more focused and productive because they all know exactly where they fit into the organisation.  They also know how their activity adds to the value of the business and the rewards that they get for their part in the value added.  They have a plan that is flexible enough that if something changes, they can adapt it and they are ready if an unexpected event or even an offer to buy comes out of the blue.  

Want to get these results for your business?  

Is your business saleable and exit ready for you to leave it (no matter when it happens)? Click to to get Christine’s free Exit Ready Checklist the expert in making sure your business is saleable for more money and on better terms.   Christine helps you get out of the day-to-day, guides you through the handover of controls and gets you and your businesses exit ready so you can enjoy a happier, richer future.  She saves you THOUSANDS so you can increase the value of your businesses by MILLIONS.