In 2020 we teamed up with ACG Boston and the M&A Outlook conference to tackle our annual CEO exit panel while navigating mitigating covid circumstances. With continued attention to providing value and leadership, we presented CEOs sharing their top 5 lessons learned—middle market private equity-backed leaders shared experiences from their 2020 liquidity events with our attendees—and we've wrapped up the insights gleaned here for everyone to learn from.
- Getting Fully Prepared is Crucial
- Alignment with Owners, Board and Leadership Team is absolutely critical.
- Clearly communicate roles and responsibilities
- Have your team in place early, and ensure you include:
- Bankers, Legal, Accounting, Regulatory, Insurance
- Other Consultants – Market Assessment, Technical Assessment
- Preparing as much in advance of starting the process is critical—once the process starts time becomes a very scarce commodity.
- Know every question that could be asked during the sale process and prepare answers in advance of launch. Including detailed spreadsheets analyzing every aspect of the business.
- The data room needs to be complete.
- All presentations and materials should be complete prior to launch (CIM, Detailed Management Presentation, Teaser, Short Management Presentation, etc.)
- Do your best to keep the team focused on delivering results As you move through the process, it is critical that urgency is maintained across the project team and established milestones are not missed. This is easier said than done as there will undoubtedly be unexpected issues and challenges. The core team has to prepare, organize and react accordingly in this environment.
- Minimize distraction: Organizing for clear accountability/ownership of key performance measures of the business in advance is very important as this is not a "business as usual" period. This may require temporary changes to organization and reporting structures depending upon the business makeup.
- Clear, consistent communication is critical: As you focus on the above areas and a successful sale process, it is easy to let communication suffer but that can't happen. It is important that you double-down on clear, consistent communication internally as well as externally to avoid unwanted employee attrition and potential misinformation with clients. Effective listening posts can keep the business and the process in-tune and on track.
- Minimal Team Involvement & Keeping Confidential is one option to consider: Protect your VP team for as long as you can and keep them focused on running the business and keep the process confidential. If you choose this playbook, it has the following best practices
- Only 4 people work on the deal until the last month of the process. The four people are the CEO, CFO/COO and two financial analysts.
- Keeping the entire process confidential included ensuring employees and competitors never found out we were selling the company until it was sold.
- Duration of confidentiality looks often like 3-4 months preparing materials prior to the launch and then 3 months to sign the deal.
- In the last month of the process involve as few as three additional team members (VPs or different departments).
- Running the process this way keeps the VP-level focused on the business which helps to hit budget numbers during the lengthier process.
