Better understanding
The multi-exit strategy
A multi-exit strategy involves establishing different exit scenarios for your company, each prepared to maximize value at different times and in different situations. This means preparing to sell to a strategic buyer, go public, merge with another company, or even hand over part of your business to your employees via a profit-sharing program. The idea is never to put all your eggs in one basket.
By considering several scenarios, you avoid depending on a single option, which may not succeed or be as advantageous as expected. For example, if market conditions are not optimal for an IPO, you may have an option to sell to a strategic competitor who wants access to your resources and customer base.
Get ready
Evaluate the options
To plan an effective multi-exit strategy, start by evaluating the different types of exit that would be suitable for your company and your sector.
Here are some possible options:
Strategic buyer
A competitor or a company in a related sector may want to buy your business to strengthen its market share or gain access to your technology.
Private equity
Private equity funds are often looking to buy profitable businesses that they can revitalize and resell at a profit.
Transfer to employees
Allowing employees to buy back shares via a shareholding program can ensure the continuity of your business while allowing you to reap a portion of your investment.
Initial public offering (IPO)
Although complex and costly, an IPO can be very rewarding if your company is ready to take this step.
The aim here is to prepare for each scenario, to know its advantages and disadvantages, and to understand when it would be most appropriate.
During a sale
Maximize your value
Planning a multi-outlet strategy is also about ensuring that you create maximum value for each potential buyer. Each type of buyer will perceive the value of your business differently. For example, a competitor might consider your customer base to be extremely valuable, while a private equity fund might place more importance on your cash flow.
Showcase your competitive advantages
Whether it's a patented technology, a strong brand, or a solid distribution network, identify the aspects that are most attractive to each type of buyer.
Optimize your processes
Make sure your internal processes are efficient and well documented, as buyers will be looking for a company that's easy to integrate.
Prepare financial and operational audits
Having clean books of account and accurate valuations will boost buyer confidence.
For each exit
Choose the right moment!
Timing is crucial in a multi-exit strategy. Market conditions, economic cycles and the state of your business sector will all play a part in the exit decision. When planning a multi-exit strategy, you need to ensure that you are able to identify the ideal timing for each of your options. This means constantly monitoring market trends, gauging buyer interest, and being ready to act quickly when the opportunity arises.
A well-planned multi-exit strategy can give you great peace of mind, because you know that, no matter what happens, you have several solutions prepared to guarantee your success.
Find out more
When a sales opportunity arises, it's often wise to ask yourself how this sale could benefit not only you personally, but all the other businesses you own or manage. Using the profits from a sale to stimulate growth in other activities is a powerful strategy, making it possible to turn a one-off success into a wave of continuous growth.
One of the best ways to use the funds obtained from the sale of a business is to invest them in other companies in your portfolio. This investment can be used to finance the expansion of your other activities, whether by increasing production capacity, financing new marketing efforts, or hiring top-level talent.
By using the funds strategically, you create leverage that enables you to multiply the impact of that initial sale. For example, if you have sold a business for a significant amount, you could allocate part of the funds to the acquisition of key skills or strategic resources that will benefit other businesses.
Another approach is to use the proceeds to diversify your business. This can include investing in new sectors or developing new products or services that complement your existing businesses. This strategy allows you to minimize risk by avoiding dependence on a single source of income.
For example, if you own a manufacturing company, you might decide to invest in a logistics company to create synergies and better control the entire value chain. Or, if you're in the technology sector, investing in a complementary company that offers services to your customers could increase the value you bring to those customers.
Economies of scale are another way of using a sale to strengthen your other activities. If the sale enables you to acquire new assets or skills, these resources can then be used in other businesses to improve efficiency and reduce costs.
Let's assume that the sale will enable you to acquire a new operations management system. This system could then be integrated into your other companies, improving their efficiency while reducing operational costs. In this way, every company in your portfolio can benefit from the sale.
The synergies created between the companies in your portfolio can also increase the overall value of your business group. Using a sale to strengthen another business can often result in greater gains than a simple injection of capital. It's important to understand the potential relationships between your businesses, and how each can strengthen the other.
For example, if you own a marketing company and sell another that was in the technology field, you may decide to use the funds to invest in marketing campaign management tools that will enhance the services you offer. These tools can be resold as a Premium offer to your customers, increasing the marketing company's revenue.
Finally, it is possible to use the profits from sales to both grow organically and acquire new businesses. Organic growth involves strengthening your current activities by improving the quality of your services or increasing your customer base. External growth, on the other hand, involves acquiring companies that complement your current business.
With the right planning, every sale can be another step in building your entrepreneurial empire. Using one sale to grow all your other businesses takes vision and strategy, but the results can be exponential, turning a one-off success into a lasting, far-reaching one.
