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Exit Strategy Consulting: A Guide to Your Business’ Next Chapter

Due Diligence, M&A

As a business leader, you’ve invested years of hard work, dedication, and innovation into building your company. However, there comes a point in every entrepreneur’s journey when it’s time to contemplate the next step: transitioning out of your business.

Whatever the reason, this pivotal moment is where the expertise of exit strategy consulting comes into play, guiding you through the intricate process of planning, executing, and optimizing your exit strategy.

But, in such a major transition, where do you even start?

In this guide, we’ll cover:

What Is Exit Strategy Consulting

A group of colleagues meeting with an exit strategy consulting at a table

In the dynamic world of business, change is the only constant. Whether you’re a startup founder, a seasoned entrepreneur, or a business magnate, there comes a point when you need to consider your next move. This is where the concepts of exit strategy and exit strategy consulting come into play.

An exit strategy outlines how a business owner intends to withdraw or transition out of their current business venture. This plan encompasses a range of options, from selling the business to passing it on to a successor, merging with another company, going public through an initial public offering (IPO) or a reverse merger with a public company, or even shutting down operations.

No matter the reasoning, an exit strategy is not just a nice-to-have; it’s an essential roadmap that guides business owners through moving on from their business while ensuring the best possible outcome.

What Are the Benefits of Having an Exit Strategy?

Hands pointing at graphs and charts on a table

It’s easy to see the importance of adapting an exit strategy for your business. But, in addition to the basics, there are additional benefits that are worth considering. This is especially true for business leaders that may not be thinking about making an exit any time soon, but want to be ahead of the game in case that day ever comes.

Some exit strategy benefits include:

  • Financial gain: A well-executed exit strategy can help business owners maximize the value of their company. Whether through a profitable sale or a smooth transition, an effective strategy can yield substantial financial returns.
  • Risk mitigation: Business landscapes are subject to change. An exit strategy helps mitigate risks associated with unforeseen circumstances, economic downturns, or industry disruptions.
  • Personal goals: An exit strategy aligns with the entrepreneur’s aspirations, whether it’s pursuing new ventures, retirement, or taking on a different role within the industry.
  • Business legacy: Business owners often aim to leave a positive legacy. An exit strategy ensures that the business thrives under new leadership, maintaining the values and principles the founder instilled — whether it’s a family business, one that’s been around for quite some time, or one that’s had a big impact. For many people, this is one of the most important aspects of having an exit strategy in place.

What Do Exit Strategy Consultants Do?

People at a table having a conversationHaving an exit strategy is important, but there are a lot of factors that come into play. This may motivate many business leaders to seek the services of an exit strategy consultant to lead the process.

While exit strategy consulting may look different depending on the business, the industry, the needs of the that business, etc.— in general, it’s a comprehensive service specifically designed to assist business owners like you in navigating the complex world of business exits.

Here’s what exit strategy consultants can provide:

  • In-depth assessment: Seasoned exit strategy consultants usually begin by conducting a thorough assessment of your business. This assessment goes beyond the surface level, delving deep into your company’s financial health, operational intricacies, market position, and growth potential. By understanding the nuances of your business, consultants gain a holistic view of its strengths, weaknesses, opportunities, and threats.
  • Customized strategy: Armed with a comprehensive assessment, exit strategy consultants craft a bespoke exit plan tailored to your unique goals and circumstances. This strategy takes into account a myriad of factors, including current market trends, potential buyers or partners, legal considerations, and macroeconomic influences. The goal is to create a strategic plan that maximizes your business’s value while keeping that legacy top of mind.
  • Value maximization: A primary objective of exit strategy consulting is to help you extract the maximum value from your business. Consultants meticulously identify areas for improvement, offering strategic recommendations to enhance your company’s financial performance, operational efficiency, and market attractiveness. This process can substantially impact the final valuation or terms of the exit.
  • Strategic implementation: Consultants become your trusted guides as you begin implementing the exit strategy. This phase involves detailed action plans, timelines, and milestones to ensure a seamless transition, in addition to utilizing appropriate resources and tools to get the job done. Consultants actively assist you in addressing challenges that arise during the process, making those tough decisions, and guiding you through intricate negotiations with potential buyers or partners.

Depending on the goals of your company, Yoav M. Cohen of NYC Advisors, LLC recommends that you start the process at least two to three years in advance. This is so you can have enough time to plan and execute an exit plan that would allow you to sell your company to a wider potential acquirers, such as private equity groups, private investors and competitors alike. If you decide to take the company public, that would require additional steps and more preparation time.

7 Steps in the Exit Strategy Consulting Process

A man and woman sitting at a table planning out an exit strategy

So, what does an exit strategy actually look like? How do exit strategy consultants get the job done? For most business leaders, it’s important to have some transparency into the process, even if you’re entrusting a consultant to take on the job. Again, this will look different for each consulting relationship.

But, let’s break down the stages that make up the exit strategy consulting process:

Step 1: Initial Assessment and Goal Setting

To begin, an exit strategy consultant will conduct a thorough assessment of your business’s current standing and your objectives for the exit. Exit strategy consultants delve into your financial records, operational strengths, and market position. This initial evaluation serves as a foundation for crafting a customized exit strategy that aligns with your aspirations.

Step 2: Crafting the Strategy

Building on the assessment, consultants collaborate with you to design a strategic exit plan. This plan takes into consideration various factors, including market trends, potential buyers or partners, and legal requirements. Consultants work closely with you to define clear goals and actionable steps, ensuring your exit strategy is both realistic and achievable.

Step 3: Strategic Implementation

Once the exit plan is formulated, it’s time to put it into motion. Consultants guide you through the practical implementation of the strategy. They assist in preparing essential documentation, identifying potential buyers or partners, overseeing due diligence processes, and more. Their hands-on involvement ensures that all necessary steps are taken to facilitate a successful exit.

Step 4: Enhancing Business Value

Value optimization is an important aspect of exit strategy consulting. Consultants collaborate with you to identify areas for improvement that can enhance the value of your business. This might involve optimizing financial performance, refining operational efficiency, or strengthening market positioning. By maximizing your business’s appeal, consultants attract potential buyers or partners who recognize its potential.

Step 5: Navigating Challenges

Throughout the process, challenges and unexpected hurdles may arise. Exit strategy consultants are equipped to handle these roadblocks with expertise. They offer solutions to ensure that the exit plan remains on track and that potential disruptions are mitigated. Their experience enables them to anticipate and address challenges effectively, minimizing any negative impact on your exit.

Step 6: Negotiation and Transition

Negotiation is a pivotal stage of the exit process, and consultants excel in this area. Leveraging their negotiation skills, they work on your behalf to secure favorable terms with potential buyers or partners. Once negotiations are finalized, consultants facilitate a seamless transition, ensuring that the agreed-upon terms are smoothly executed.

Step 7: Post-Exit Guidance

Even after the exit is complete, exit strategy consultants should continue to provide valuable support by offering post-exit guidance, assisting you in navigating the transitional phase. Whether it’s allocating proceeds, exploring new opportunities, or addressing any lingering concerns, consultants remain by your side to ensure a smooth transition to your next venture. They can also stay on-board to help the buyer in transitioning, especially if the buyer wants to integrate his company with the acquired business.

In essence, the exit strategy consulting process is a structured journey that successfully brings together careful planning, hands-on execution, and expert guidance. Consultants work diligently to ensure that your exit is not only successful but also aligned with your long-term goals.

Is It Time to Engage Exit Strategy Consultants?: A Checklist

A group of colleagues sitting around a table discussing an exit strategy

If you’ve come to the conclusion that hiring an exit strategy consultant is the way to go, the next question is, “When is the right time to bring in an exit strategy consultant?” Though two to three years in advance is the recommendation, this decision can greatly impact the success of your business exit when all is said and done.

Here’s a checklist of key signs that might indicate it’s the right time to engage these experts

Navigating Complexity

  • Is your business currently characterized by multiple branches, partnerships, intellectual property, or global operations?
  • Do you find the current structure of your business to be intricate and challenging to manage effectively?
  • Are you concerned about overlooking crucial details in the exit process due to the complexity of your business?

Market Agility

  • Is your industry experiencing rapid changes and shifts in market dynamics?
  • Are you observing emerging opportunities that might impact your business’s exit strategy?
  • Would you benefit from expert insights into how to pivot your exit strategy to align with evolving market trends?

Time Constraints

  • Do you find it overwhelming to juggle day-to-day business operations while simultaneously preparing for an exit?
  • Are you concerned that focusing on exit planning might compromise the smooth continuity of your business operations?
  • Would having dedicated time and attention from experts facilitate a more successful transition?

Emotionally Informed Decisions

  • Do you find yourself grappling with sentimental attachments, emotional ties, or uncertainty about the future of your business?
  • Are you aware of the potential emotional challenges that can arise during the exit process?
  • Would an external, objective perspective help you make rational decisions while navigating emotional aspects?

If you’re having any doubts about your company’s ability to manage it internally, even answering “yes” to some of these questions can shed some light on the advantages of bringing on an exit strategy consultant.

Questions to Ask an Exit Strategy Consultant: Finding the Right Fit

A group of colleagues sitting at a long desk
And, finally, time to interview the exit strategy consultants themselves. This can be the hard part. How do you know these services are the right fit for your business?

Choosing the perfect exit strategy consultant for your business involves asking the right questions. Here’s a consolidated list to help you during the interview process:

  • What’s your experience in exit strategy consulting?
  • Have you worked with businesses similar to mine in terms of size, industry, and complexity?
  • How do you stay updated on market trends relevant to my exit strategy?
  • How do you typically approach crafting an exit strategy?
  • Can you share a successful exit strategy you’ve developed for a previous client?
  • How do you ensure the exit strategy is tailored to my specific business goals?
  • Will you personally handle my case or work with a team?
  • What resources do you have available to support the execution of the exit strategy?
  • How do you maintain open communication throughout the process?
  • How do you identify opportunities to enhance business value before an exit?
  • Can you provide examples of clients whose business value you’ve maximized?
  • What strategies do you use to make my business appealing to potential buyers or partners?
  • How do you navigate challenges during the exit process?
  • Can you share an example of a challenging situation you’ve successfully resolved?
  • What proactive steps do you take to prevent disruptions to the exit plan?
  • How do you approach negotiations with potential buyers, partners, or investors?
  • Can you share your success record in securing favorable terms for clients?
  • What strategies ensure my interests are well-represented in negotiations?
  • What support do you offer after the exit is complete?
  • How can you assist during the transition phase and with potential challenges?
  • Do you provide guidance on allocating proceeds, exploring new opportunities, or planning for the future?
  • Can you provide references from previous clients who’ve successfully exited with your help?
  • How do you measure the success of an exit strategy, and can you share examples?
  • Do you have case studies showcasing your impact on clients’ exit strategies?

An Example of Exit Strategy Consulting

A case study of preparing a company for a sale by NYC Advisors, LLC:

The Company:

Provider of accounting services to long-term care facilities

The Work:

We were contacted by an M&A advisor to the company, who said that the company was not prepared for a sale in its current state. NYC Advisors was hired to do prepare the company for a sale

  • Performed internal due diligence and created a gap list
  • Managed the conversion of the accounting method from Cash to Accruals, and oversaw the company’s first annual audit
  • Managed the creation of service agreements and all other legal documents needed for customer and supplier relationships
  • Interfaced with the M&A consultants to provide and explain an extensive list of due-diligence information
  • Worked with the Seller’s corporate attorneys to negotiate transaction terms & conditions, and to close the sale to an ESOP (Employee Stock Ownership Plan)
  • Supported ESOP implementation
  • Assisted in hiring a corporate CFO

Talk to an Exit Strategy Consultant Today

Two women holding coffee discussing exit strategy in front of a large window

In the intricate and transformative realm of business exits, exit strategy consultants emerge as your confidantes and collaborators. With strategic insights, knowledge innovative tools, familiarity about market trends, and a wealth of experience at their disposal, hiring (the right) exit strategy consultant is a no-brainier.

However, whichever exit strategy consultant you choose must be committed to your success.

Here at NYC Advisors, we offer dedicated exit strategy consulting to help your business confidently move onto this next chapter. Contact us today to learn how we can get started.