There are more than 500 new hi-tech SaaS businesses founded weekly in america. It is becoming more seductive to launch your own SaaS, with the thought of a big exit paycheck being written 3 to 4 years later, then purchasing the Powerball $500 million ticket. The sexiness of the "big exit" increases with the news headlines of another big windfall. Last weeks block buster $1 billion acquisition of Dollar Shave Club by Unilever is merely another example.
Susan Faykus, from Integrated Financial in Austin, Texas, says: “Generally, when we help companies exit their existing company, we commonly find they have waited too late to activate legal, business broker and financial strategist professionals that may help them mitigate the heavy tax burden that might have been restructured for philanthropy or their legacy.”
4 Methods to Create a Better Exit Strategy
In the wake of the Dollar Shave Club deal, I reached out to my very own business advisers, at Commerce Business Advisers, and asked them what exactly are the three biggest mistakes that founders make in the first days, that eventually hurt their exits. Their thoughts contain incredible advice because of their early stage exit-seekers. Read and heed:
Founders wait too much time to assemble the perfect team of advisers. The founder will potentially add 20-30 percent to the worthiness of the exit if indeed they have a solid team of advisers at the initial possible stage — a skilled and professional team of business intermediaries/brokers, legal, financial strategists and tax planners who can expertly structure the business enterprise to perform the seller’s goals, including lifestyle, philanthropy and legacy. The advisers may also be experienced in the market and open crucial doors for fund raising, business development and strategic partnerships.
Failing woefully to recruit and secure a management team that contain the knowledge, accomplishment and sophistication required by a buyer post-acquisition. When someone is preparing to buy your company, they will consider the quality/experience of the managers, as the retention of these people will be area of the deal. Getting the right managers empowers the customer to concentrate on the entire management of the business in the role of CEO, without needing to also become CFO and/or COO.
Why YOU WILL NEED an Exit Technique for Your Business
Failing woefully to install and offer IT systems to support the growth sought by the brand new owner. If the business does not have the proper business growth and management systems set up, the business will be less attractive. A few examples are: Netsuite for accounting and Silicon Valley Bank for banking. Any potential suitor could be more worked up about buying your company if indeed they see NetSuite and SVB are part of your team. As it has become an extremely critical aspect of today’s companies’ operations, audience have intensified their scrutiny of the seller’s IT systems. In a “roll-up” scenario, the simple a smooth integration of the IT system is a key element of the transaction.
Five Smart Exit Strategies
Should you be already are playing the "big check exit" lottery, then check your advisers, managers and systems and boost your odds.