A business owner always knows the most about his business the day before he sells it. However, business owners who run their business like it’s for sale, every day, are in the best position to maximize their return when that day finally comes.
X-it provides companies with an advanced, long term approach to planning and readiness for that event. Senior management teams are often overwhelmed implementing strategy, making tactical decisions, and simply running the day to day operation. Therefore, little time is taken to plan the exit event properly. Once the principals of any business decide they want to start the exit process (often potential suitors make that decision for the principals), there are five primary steps to the process:
- Negotiating and executing the "letter of intent"
- Buyer due diligence
- Executing the purchase agreement / Closing the sale
Preparation and buyer due diligence preparation are the primary focus of X-it. The other three steps above are best served by engaging a broker/investment banker and an attorney.
Buyer due diligence is usually consistent in terms of the comprehensive list of items requested; however, there is a range in terms of the level of detail about any one area of the business the buyer wants to understand and audit. Typically, the buyer is looking for data that goes back anywhere from three to five years. The objective of buyer due diligence is multi-faceted. The buyer wants to:
- Further understand the nature of your business practices.
- Validate representations made by Seller during the marketing phase.
- Test the quality of the operating practices they will inherit.
- Begin to understand what changes may be necessary once they own the business.
- Identify areas of risk in order to make a "Go/No Go" decision on the purchase.
- The buyer may want to identify issues in an effort to lower the purchase price offered.
The more prepared a seller is with their due diligence materials, the more satisfied and impressed the buyer will be with the quality of the operation and management team. These materials should be presented in an organized fashion and should be accurate and up to date. Building this environment is best served by having a process that is managed and the best processes incorporate automation. In this case, the Company needs an "Exit Portal". Building and Maintaining the Exit Portal will decrease the time to close, increase the likelihood of closing (deals that drag on often break down), and will likely avoid (or minimize) the standard "re-trading" process that the buyer will undertake, given poor findings during the due diligence process. Ultimately, proper preparation increases the overall return of the equity holders.
Companies should begin to prepare for the exit from the time they start the business. If your business is beyond the startup phase, then the sooner this preparedness begins, the better. Even though a company may not be planning for an exit in the short term, the fact that buyers are looking for long term data requires that the Seller always think in terms of the buyer due diligence process. Further, X-it believes that operational process improvements will be obtained simply by setting up the Exit Portal.
The process X-it uses to successfully build out the data in the Exit Portal is analogous to an Internal Audit of all critical business processes, where a large part of X-it’s focus will be to identify deficiencies and opportunities for improvement. Additionally, the monitoring and consistent update of information and metrics that a business gathers for due diligence can inherently improve the operating performance (you can't manage what you don't measure). X-it believes that the gathering process will identify potential threats and weaknesses that can be addressed well in advance of the exit decision, which is likely the most valuable reason to engage in this process.
Why should your company work with X-it?
Ken Wiesenfeld, the principal owner of X-it, has over 20 years of progressive financial and operational experience. The last eight years of which culminated with a very successful exit for the equity holders of Security Networks, one of the top 20 largest residential security companies in the United States. Security Networks was majority owned by a Private Equity firm and the company was sold to a publicly traded company in the industry. Though not his first exit event acting as point man (as the CFO often is), the exit process was extensive and provided incredible insight into the requirements of the exit event and buyer due diligence, particularly in the security industry. Ken's highly detailed and project oriented mindset, and experience in the selling process make him uniquely qualified to assist companies with their preparation efforts for buyer due diligence. Additionally, Ken has participated in a large number of debt financing efforts, financial statement audits, and is known by those that have worked with him as being a very operationally oriented financial professional.
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