Each spring, we at BSG assemble an august panel of private equity-backed CEOs who have exited their businesses in the last 12 months. The goal? To "share it forward" with other current and future CEOs as they buy, build, and exit their own companies.
Below is this year's 2016 vintage of wisdom. This year we had the privilege of having 3 CEOs on the panel, including Peter Segall, recently CEO of HealthcareSource (https://www.linkedin.com/in/psegall), and Gordon Raskin, former CEO of Archive Systems (https://www.linkedin.com/in/gordon-rapkin-7aba8). Amy Margolis of Riverside Company (https://www.linkedin.com/in/amy-margolis-38805211) also joined the panel to offer the macro view from the PE perspective, framing 2016 and the prevailing head- and tailwinds private-equity-backed CEOs faced in exiting their companies in this time window.
A note about BSG: We generate and curate collective wisdom like the below as we believe our role as executive search consultants isn't just finding the next star executive talent to round out a team or board, but to serve as information connector and conduit between all executives who power top quartile performance.
For our 2015 vintage, see here.
Think and act like a grocery store – “best if sold by...” Have a clear alignment with investors about timing and expectations.
This board is comprised of a diverse network of confidantes – other CEO's with exit experience, bankers, investors, etc.. You need to nurture an objective and up-to-date viewpoint on market conditions, industry specific buyer hot buttons and trends in M&A.
Date before you try to get married. Carve out a little time in the years before the process to informally get to know the potential buyers, so they are not meeting you for the first time during the process. You will need a rapport with the buying CEO in order to get the deal done.
Good news keeps the momentum going; bad news opens the door to re-trading.
Audits, legal, tax, tech, etc.
Clearly defined, supportable by the detail – if anything is squishy, fix it. Confront reality and make sure your board/investors are all on the same page
...who knows your industry and has good chemistry with you.
Be willing to walk away from any deal that isn’t good.
Time usually doesn't help processes, valuations, or, most importantly, ongoing mission focus.
Investment bankers and potential investors will arrive with plenty of them: Valuation comps, average revenue multiples, EBITDA multiples, management ownership shares, return thresholds for performance shares, rollover percentages, vesting time frames, etc.. All of these are ripe for investigation and scrutiny. Understand the full spectrum of possibilities, your unique story and place in the world, and where you can push and where you can't.
You have fiduciary responsibilities to ownership/investors (and likely are included in one or both), but you also represent management and the ongoing entity. Being true and highly focused on your mission (business) rather than a transaction will paradoxically serve you well in maximizing value in a transaction.
Constantly work on your story telling and make sure your story is cohesive and compelling and reflects the "connectedness" between the things you've built (team, infrastructure, organization, products, client relationships, etc..) and the future opportunity. This should appear seamless. A never-ending story.
If you remain focused on "thinking forward" about what the future growth of the business will be, often a transaction isn't cause for concern. It's business as usual and everyone knows that mission focus is key, not a potential transaction. Employees are pretty smart anyway. They'll find out on their own and create their own narrative if you don't. Keep the deal team as small as possible to tell your story in a compelling way, and keep everyone else "informed, but mission focused."
Take care of yourself during the process. Take up yoga (for insights), boxing (for "negotiation skills" and outlet for frustration) and triathlons (for endurance). You'll likely need all 3 sports to make it over the exit finish line.