10 steps to a successful exit strategy

Keet van Zyl and Andrea Böhmert don't agree with the American billionaire and made their sentiments known in an address at the Knife Capital Exit Conference at the Sandton Convention Centre on Friday, 21 August 2015.

Böhmert said exits stoked the culture of entrepreneurism in the country, creating more serial businessmen and angel investors, as well as increasing confidence in venture capital.

"We encourage entrepreneurs to build sustainable, lasting businesses, but with an end in mind. Every journey comes to an end, whether it be via retirement, liquidation or acquisition. When it does, it needs to be as valuable." - Andrea Böhmert (Partner at Knife Capital)

Van Zyl outlined his 10 steps to a successful exit:

  1. Be awesome. Start-ups don't deserve special treatment. Businesses need to be solid all-rounders to be considered for a buyout.
  2. Build a business, not a product. It is all very well having a revolutionary app or new investment vehicle, but ultimately, your success will depend on your mastery of business fundamentals.
  3. Build a solid platform for growth. Businesses need to be awesome across the board, not just in one or two departments.
  4. Generate traction verticals. Build upward momentum by, for example, investing in marketing, winning awards and building an audience.
  5. Scale proportionately. You need to balance the growth of core dimensions. A small team will not be able to execute on a business model that is too big.
  6. Package the opportunity. Investors are difficult to reach - start-ups need to present themselves in the best way possible and avoid communication problems.
  7. Build a partner universe. Enter into as many strategic partnerships as possible.
  8. Populate your data room. Start-ups need to make investment as painless as possible and possess a data room with corporate, marketing and financial information about the business.
  9. Understand your value. Be realistic about what you have to offer and manage your expectations. What will you be selling at the exit stage?
  10. Build the right networks. Align yourself with the right people to earn full value for your business.
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What is also really important to to have a well conducted and executed divestiture or exit plan, which is done professionally. Skilled external advisors who can undertake this role can also add value as advisors and negotiators, can manage competitive tension, and can provide the best possible scenario to maximise shareholder value.

Modus Advisory offers a comprehensive and professional service to assist shareholders to prepare and execute the sale of their business, from initial planning through to completion.