Larry O’Toole
This morning’s PURPOSE…. Thinking about the “right combination of things” Actions you could be starting now 3
….can you point to who owns building your sales and is there a plan? ….who owns delivering my product and is there a plan? ….who owns the quality of your financial controls and is there a plan? ….who owns driving your Enterprise Value and IS THERE A PLAN?
Preparing to Exit Preparing to Maximize Value at Exit Decide to sell Identify early “what good looks like” Engage a professional Identify gaps Develop a CIM Identify acquirer EV priorities Prep for due diligence Link business strategy with EV creation Contact target acquirers Build the right team, right culture Manage the process to conclusion Align business decisions with EV Build ways to excite future buyers Monitor the cycle of exit multiples Decide to sell Engage a professional Develop a CIM Prep for due diligence Contact target acquirers Manage the process to conclusion Playing Offense Playing Defense
Economic measure reflecting the market value of a business. It is a sum of claims of all claimants: creditors (secured and unsecured) and equity holders. Multiple - Debt Trailing Twelve Months (TTM) EBITDA X - By driving revenues and profits, you’re maximizing EV - The “multiple” is whatever the market will dictate - When I decide to sell…it’s time to focus on EV
Timeline 2 Successful events 4 Years High buyer interest Buyers impressed w/readiness Above market multiple Met Sellers $200M Target!! Formed the Deal Team Prepared the Organization 2.5 years Monitored Market, Timing, Players Bridged Strategy to EV Plan Training/aligned team with EV supporting targets - Linked the value drivers into our strategic plan - “Coffee chats” to identify acquirer value drivers - Identified What Good Looks Like – advisors gathered Starting point valuation $120M range 2 years Set the Reward Maximization EV target versus a date 7
Where We What We Did Benefit to Acquirer Focused On Financials Build upward trend. Sees scalability. Ensured integrity of #’s. Provides confidence. Sales Pipeline Show access to key customers. Shows professional tracking. Show robustness. Future runway to enjoy. Platform Tracking Targeted attractive programs. Shows professional tracking. Earlier stage vs mature. Future runway to enjoy. Customer Contracts Central controlled/tracked. Willing to accept. Clear of onerous clauses. Sticky Plotted customers on a scale. Critical area for exciting them! Identified opt’ies to increase. CI Pipeline Show culture of productivity. Shows runway for them to enjoy. Organization Strengthened pedigrees of team. Ease of assimilation. Complement of talent. Due Diligence Prep Readied for the “exam”. Supported ease and speed of Including Voice of Customer. doing a deal. 8
Build to Print to Build to Model • Design ownership, defacto spec, name on drawings Innovate • Invest in the R&D to create unique IP, achieve customer certs Create innovation in the supply chain • Eliminate/reduce customer production concerns & costs Innovate eco-friendly product and/or supply chain • Reduce production carbon footprint • Re-purpose a product for reuse Move from parts to kits/assemblies • Remove swim lanes for the customer
Secret Sauce The Right Combination of Elements What Does Start Early – Minimum 2 to 3 years Good Look Like Know Your Environment Bridge Strategy With Your EV Assemble the Right Deal Team Enable the Organization
Secret Sauce The Right Combination of Elements What Does Good Look Like Owners personal plan upon exit Dollar target versus date Deal Structure, Facilities, People, Brand
Secret Sauce The Right Combination of Elements Know Your Environment “Coffee chats” Monitor multiples & deal activity for learnings Build relationships…suitors, bankers
Secret Sauce The Right Combination of Elements Bridge Your Strategic Plan with Your EV Creation Plan Link Coffee Chat learnings in to strategic plan Work a typical due diligence check list EV plan is effective with key stakeholders
Buyer A Buyer B Buyer C Status EV Enablers Description Financials/Reporting Performance trends. Integrity/quality of 3 3 3 Sales Pipeline Tracking/trending. History of good hit rate 3 2 2 Enterprise Value Creation – Priority Setting Customer Platforms Tracked, growth projections, annuity bus. 3 3 3 Customer Contracts All clean. No IP loss. No first right of refusal 2 3 3 Customer concentration No customer more than 15% of revenue 1 3 3 Vendor Contracts No sole source reliance, no IP sharing 1 3 3 Stickiness Customer reliance on us 3 3 3 Pricing Management Good policy, oversight & control of 3 3 3 Industry Mix Desired mix – higher margin segments 1 2 2 Access to IP Company developed & controlled 2 2 2 Cost Out Pipeline Robust cost out history & pipeline 3 2 3 Facility/Capacity/Equip. Utilization/ability to support growth 1 3 3 Team/organization Right people, structure, culture 3 1 3 IT/systems Enabler to the business 1 1 3 Mission/Vision/Values Consistent across organization - lived 1 3 3 Value Proposition Identified & articulated 3 3 3 Availability of key people Willing to transition to work with owner 3 1 3 Access to customers Want to leverage your relationships 3 3 3 Geographic penetration Want to leverage your access 3 3 2
Secret Sauce The Right Combination of Elements Enable the Organization Ensured structure could be assimilated Identified critical positions…ensured transferability Strengthened “pedigrees” in core competence areas Ensured Culture would be attractive
Secret Sauce The Right Combination of Elements Assemble the Right Deal Team Identified “deal” professionals Established experienced “point person” Identified “negotiations” team
The Right Combination of Elements To EXCITE the buyer(s) What Does Start Early – Minimum 2 to 3 years Good Look Like Know Your Environment Bridge Strategy With Your EV Assemble the Right Deal Team Enable the Organization
Thank You! Larry O’Toole Email: Larry.OToole@YosemiteAssociates.com Mobile: 949.874.0787 18
Recommend
More recommend
