Managing a Successful M&A Exit – Planning Your Future

By Generational Equity


Recently Axial, a leading online platform that introduces capital providers to business owners and buyers, published a tremendous whitepaper entitled “The CEOs Guide to a Successful Exit.” As with all their research, the data and ideas presented were fantastic. But what makes the document even more meaningful is that it is based on input from professional CEO coaches with Vistage, a peer-based CEO educational association.

Since the information is powerful, I thought I would share parts of it with you over the next few weeks.

We start with a topic we have covered several times before: effectively planning for your life post exit long before your actual exit. This is how Axial explains the issue:

Think long and hard about whether you want to stay on with the business post-transaction. Picture yourself at your headquarters with someone else in the corner office. Will you be able to handle ceding control of the company you’ve built to an outsider? Whether or not you want to stay will help determine how you position your company, to which types of buyers. Private equity firms, for example, will typically require a management team stay on board. Strategic acquirers can more easily insert their own executives.

This is an important concept to discuss with your trusted advisors, spouse, and M&A consultant. If you are interested in being retained post acquisition, you need to determine if you are willing to take orders from a new boss, especially if the targets you are approaching will be equity firms. This is often a hard transition for many entrepreneurs who are used to being the boss and not being required to approach strategic planning in a collaborative fashion. Be sure to do some self-evaluation long before you begin discussing your business sale with buyers.

For those of you that are at a point in your life where staying with your firm beyond a transition stage is not an option, you have a second set of issues to analyze:

To prepare yourself for [exit], think about what you will spend your time doing after you’ve exited the business, and be realistic. If you’re used to working 12-hour days, and find satisfaction in your work, you may not enjoy constant relaxation as much as you think. You might plan to start a new venture, or dive headfirst into a passion that was formerly a hobby. Perhaps you’ll spend your time travelling. Whatever it may be, crafting a plan will help make exiting your business easier.

Past clients often contact us a year or two after we have sold their company with inquiries about buying another business from us because they are spending so much time at home that the spouse is begging them to get out of the house. The reality is most entrepreneurs have dedicated 20-30 years of their lives and usually sacrificed lots of time focusing on growing the business. Transitioning from that pace to retirement can be a huge challenge and lead to serious disappointment if not planned in advance.

The most important factor to consider before you exit is planning for what your life will look like post transition. The more you can determine what your life will be like, the better the chances that you will actually close a transaction. Far too often we see business owners who pull out of due diligence at the 11th hour because they turn to their spouse and ask, “So what am I going to be doing next month?” If the answer is a blank stare, odds are far too good that you will not successfully complete your transaction, no matter how good the buyer and the deal might be.

Plan for your post deal life. A great way to do this is to talk to other CEOs who have successfully gone through a transaction and are now leading post transaction lives. Odds are good that you will also learn a great deal about yourself if you take the time to really consider the post close options available to you.

Another way to plan is to attend a Generational Equity M&A seminar near you.

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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