Is Your Exit Plan Just a Fantasy?
On paper, this business looked in good shape…
But when I spoke to the co-owner last week, it was clear their three-year exit plan and target valuation were in fantasy land.
The reason was simple enough: they had dangerously low profit margins for a business of their size and particular IT niche.
This can be relatively quick to solve if the issue is related to incorrect pricing, cost control problems, or weak sales. In their case, it was pricing.
However, it’s a bigger problem for companies when low profit margins are due to market saturation or because you offer the same as everybody else in your sector. That takes more time to fix.
When it comes to achieving the valuation you want, remember that potential buyers will make judgements about their investment risk and your vulnerability to market shocks.
And that’s why high-valuation businesses have exit strategies that are years in the making.
#ExitLaunchpad #NextLevelGrowth #m&a
