How to Have a Value-Added Exit Preparation Conversation as an Executive
Written By: Gerald O’Dwyer IIThe PE Guru — Blackmore Partners, Inc | November 13, 2024
Step 1: Build the Relationship and Establish Trust
- Start with Genuine Curiosity: Ask the owner about their journey, the challenges they’ve overcome, and where they envision their business going. Showing a deep interest builds immediate rapport and creates a foundation of trust.
- Acknowledge Their Achievements: Recognize and respect what they’ve built. By validating their experience and success, you set the stage to discuss how a well-structured exit could help achieve their broader goals.
- Connect Their Vision to Exit Planning: Gently transition into the exit discussion by aligning it with their goals. This conversation isn’t just about a sale; it’s about planning for their legacy and future.
Step 2: Identify Preparation Gaps and Map Out the Process
- Share Common Pitfalls to Watch For: Many business owners aren’t fully prepared for an exit when they start considering it. Let them know that only 25% of sellers are “ready” when they first reach out for help. This opens the door for you to address specific areas of improvement.
- Outline the Core Steps in a Successful Exit Plan: Introduce the essential components that will add value to their business:
- Financial Preparation: Ensuring GAAP-compliant financials, conducting a sell-side Quality of Earnings (QoE) analysis, and organizing records for buyer review.
- Operational Independence: Developing a management team that can operate without the owner’s daily involvement.
- Valuation Insight and Realignment: Helping them understand current market valuations and setting realistic expectations.
Step 3: Create a Suite of High-Value Services for Ongoing Advisory
- Position Yourself as Their Go-To Advisor: Offer tailored services at $300-$500 per hour, designed to guide them through each stage of the exit process. Here’s how I suggest presenting the services you can provide:
- Exit Readiness Assessment ($300-$500 per hour): A comprehensive review of their operations, financials, and team structure to assess their readiness for exit.
- Financial and Due Diligence Preparation ($300-$500 per hour): Ensuring their financials are GAAP-compliant, conducting a sell-side QoE analysis, and optimizing records to boost valuation.
- Management Team Development ($300-$500 per hour): Supporting them in building an independent, capable team to maintain business continuity post-sale.
- Market and Valuation Guidance ($300-$500 per hour): Sharing market insights and valuation trends to help them set realistic, data-backed expectations.
- Deal Structuring Support ($300-$500 per hour): Advising on deal structures, earn-outs, and financing options to make the transaction as smooth and beneficial as possible.
Step 4: Highlight the Unique Advantages of BlackmoreConnects
- Access to Powerful Resources and Networks: As part of BlackmoreConnects, you offer access to PE firms, industry-specific advisors, and insights via tools like PitchBook. This insider knowledge helps them understand exactly what buyers want.
- Repeatable, Proven Process for Success: BlackmoreConnects provides a step-by-step, repeatable process, reducing risks and ensuring a streamlined exit. Let them know they’ll be working within a tested system that produces strong results.
- Risk Mitigation and Value Maximization: BlackmoreConnects focuses on minimizing risk and maximizing value for owners who are serious about a high-impact exit.
Step 5: Position Your Engagement as an Investment in Their Future
- Present Transparent Billing as a Long-Term Value Add: Frame the hourly rate as an investment that offers immediate returns at every step. Each phase addresses high-impact areas, ensuring they see benefits from day one. Highlight a phased approach that lets them prioritize based on needs and budget.
- Commit to Full Support Through Closing: Emphasize that your role with BlackmoreConnects is to act as their advocate and partner throughout the entire exit process, supporting them until the deal is complete.
Conclude with a Vision for Legacy and Financial Freedom
Wrap up by expressing your commitment to helping them exit on their terms. This is about more than a transaction; it’s about securing their legacy and maximizing the value they’ve built. By staying available and responsive, you reinforce your role as a trusted advisor, building a bridge for ongoing support.
By aligning your approach with the BlackmoreConnects advantage, you position yourself as an essential partner on their journey to a successful and fulfilling exit.