Achieving the Dream Business Exit

The Dream Exit

Business owners may often think about how to exit their business and what it might be worth. For some it is just a dream, for others, a business exit strategy is their key driver & business vision. The journey may last a few months, a few years or 10 or more years.

For one client of ours, an exit strategy was always the goal, whatever the timescale. The husband & wife team with huge energy & passion successfully grew their chocolate business with its distinctive brand over 8 years to £3m turnover. Then the 2008 financial crisis damaged their success, bringing distress for profits and cash. Their insightful bank manager understood the potential of both the business and the abilities of the owners, so they introduced Secantor to provide some independent management & financial support from an experienced external perspective.

Turnaround

We helped manage the turnaround by closing unprofitable shops, selectively improving gross profit margins and strengthening financial controls. However, the owners had been micro-managing the business, which was actually four totally different & distinct businesses. They had become victims of their own success. We carried out a strategic business review by interviewing each of the key players and studying the available financial & operational information. It provided a unique combined insight from the owners, the key staff, plus our own external strategic perspective.

Getting on Top of the Business

Together with the owners, we identified four young potential managers with talent, determination & knowledge, each one to take responsibility for each business. The owners trusted their new team and delegated full accountability for the performance. Acting as FD/Facilitator, we joined the owners & managers to form a complementary management team.

Having got on top of the business to get the big picture view from above, the owners let go of day-to-day operational management, trusted in their people and created their future business vision from fresh strategic & objective thinking.

Executing the Plan

They prepared a business plan together with an action plan with goals & targets for each of the management team. They listened to customers, assessed the market & USP and reviewed their products & margins. Especially important was their brand & reputation, ie, a British family-owned business with a unique personal story, a fair trading ethos, innovative chocolate flavours, and a quirky and fun culture exuded both internally and externally. We assisted the owners in translating the business plans into a robust financial forecast, providing the basis for monthly tracking of actual performance.

The owners plan included building value in the business through:

• New customer acquisition, particularly wholesale trade to multiple retailers, plus online consumer sales.
• New markets, especially the US, where large orders from a major supermarket chain followed soon after a trade mission visit, prompted by Secantor.
• Product development whilst focusing on key core products - there were a few mistakes, but lessons were quickly learnt & they moved on.
• Emphasis on gross margin analysis and much stronger stock & cost control.
• Improved factory planning, methods and controls through tightened disciplines and strong supervision.
• A major investment in plant & equipment quadrupled production capacity and achieved substantial productivity gains.

Best Practice Management

The business plan also embraced developing best practice management through:

• Structured monthly Board meetings with an agenda, financial & operational MI circulated ahead of meeting, whilst action notes with responsibilities & dates kept everyone on their toes.
• Re-organised management accounts and forecasts, plus KPIs were added to aid operational & strategic decision-making, where business goals were translated into personal goals and individual accountabilities were introduced for each member of the management team.

• Challenging & motivating the team towards improved performance. The owners also appreciated being challenged by Secantor to achieve their strategic goals.

Corporate Finance Specialists

The original exit plan was potentially to be succeeded by their children, but this was ruled out after 5/6 years. At this point, we started talking to Corporate Finance specialists, and so the focus became a trade or investment exit sale.

Over the ten-year period, the business successfully scaled up in preparation for an exit sale. Sales growth had been extraordinary to several UK as well as US supermarkets and also online. There was a well-developed & managed product range with new innovations, both chocolate products & packaging for every season, with regular pruning to keep novel and control stock levels.

The business demonstrated a solid track record of historic growth in profits and future potential, plus a strong, established brand and reputation. Future profit forecasts showed excellent ongoing growth backed by evidence of a good forecasting track record. The owners had established partners, both customers & suppliers, with strong mutual relationships & understanding and sharing of plans & developments, ie, developing a recurring business together. There was a solid order book, sales pipeline & record of successful lead generation & conversions.