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.
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.
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.
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:
The business plan also embraced developing best practice management through:
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.
Finally, the management team, now including finance & HR executives, had grown with the business and managed the day-to-day affairs, which enabled the owners to reduce their time commitment. There was a time when a two-week family holiday for the owners involved taking office calls and emails. But with a strong accountable management team in place, this became a thing of the past. In fact, the owners could take a three-week holiday and also shorten their working week without a detrimental effect on the business.
The owners sold their majority share to private equity at a high multiple, retaining 1/3rd themselves. The PE firm has invested significantly in marketing, and the owners look forward to their final future exit. One very happy & successful couple!
The owners were delighted with the outcome and the impact that Secantor had on achieving the turnaround and successful sale:
It’s a very cost effective way for us to have high level management and strategic help
We will never forget your huge contribution and your constant support, encouragement and all the board room laughs. Thank you for everything!
Are you a small business owner who is thinking of retiring and reaping the rewards of many years of hard work? Do you want help to prepare your business for a successful exit? Or perhaps you know someone else who is? Get in touch with us. Secantor has a wealth of experience with helping businesses fulfil their potential - let us know how we can help.
Since all businesses are different and may have varying financial requirements, it makes sense for one of our experts to get to know your company in greater detail so we can create the perfect package for you. To do this, we provide a free business review or site visit, enabling us to obtain all the relevant information we need to improve and manage the financial side of your operations. Contact us today to start the conversation.
Over the years we have helped hundreds of businesses take control of their finances. By working closely with owners and directors we become an integral part of the management team and as a result have long-standing relationships with our customers, many of whom have relied on our expert knowledge, advice and guidance for many years. Why not review some of our case studies or watch the one-minute video below to hear what our customers have to say?