Pre-Exit Planning (PEP)

You only get one chance to sell your business…

 …And getting maximum value requires advanced planning and preparation

 

 If you are planning to sell your business in the next 2-3 years,

the time to start the preparation process is NOW!

 

Pre-Exit Planning (Pep)
exclusively by DCA

What is Pre-Exit Planning?

PEP is a program designed to enhance your business’ value to prospective buyers, and entails:

  • Identifying what is likely to drive an optimal valuation and the characteristics that are most important about your business to your ideal buyer
  • Developing an actionable plan to close any gaps between where your company is currently at and where your ideal buyer would desire it to be
  • Executing a plan to implement changes that enhance your business’ strengths and eliminate any issues of potential concern
  • Positioning your company to capitalize on a solicited, or unsolicited, offer

Why we developed the PEP Program:

Companies were approaching DCA wanting to sell their business because:

  • They had an unsolicited offer
  • They were ready to retire
  • They wanted to take on a new challenge
  • Personal circumstances demanded it

We knew that we could get them a higher exit value if they had done work up front to prepare their business for sale, for example:

  • Diversified their customer mix
  • Increased margins
  • Developed a strong management team and staff to lead in their absence
  • Organized  their finance and governance structure
  • Mitigated regulatory, compliance and other risks

We want to get our clients the optimum exit value they desired and deserve

  • PEP was developed to help companies implement targeted changes in their business ahead of exiting to ensure they receive maximum value in their ultimate sale

Why is it important?

  • Buyers will likely be critical of all parts of your business
  • During due diligence, buyers will explore each aspect of your business, revealing your business’ high points, “Enhancers”, and low points, “Detractors”
  • Enhancers add value while Detractors reduce value
  • It is important to understand what your business’ Enhancers and Detractors are ahead of time so that you can highlight Enhancers and reduce Detractors to increase your value

What’s involved? 

DCA will…

  • Evaluate your business from a buyer’s perspective
  • Establish an estimate of value based on your company’s current profile
  • Identify “Enhancers” and “Detractors” that will impact your exit value
  • Develop a plan with timelines and accountability to improve your businesses’ exit value
  • Close the valuation gap by eliminating Detractors and optimizing Enhancers

 

How is it valuable?

PEP helps DCA clients get a higher valuation multiple on more profit creating a big WIN

 

For example:valuation_gap2

How does it work?

Phase I: Initial Valuation, Assessment and Gap Analysis

  • Determine the value your business is worth today
  • Identify Enhancers and Detractors
  • Measure the gap for each Enhancer and Detractor from where your business is now to where it will be when you sell

Phase II: Formulate a plan to close the Gaps

  • Develop an action plan to maximize Enhancers and eliminate Detractors
  • Identify key value drivers (KVDs), and tracking metrics for each
  • Generate a benchmarking report for KVDs, Enhancers and Detractors

Phase III: Close the Gaps

  • Have a quarterly PEP talk with DCA to review current financials and your company’s Readiness Action Plan (RAP) to reassess Enhancers, Detractors, Readiness and Key Value Drivers
  • Discuss exit timing and potential buyers
  • Have phone consultations, as needed, on financial and strategic issues
  • Receive an Annual Valuation Assessment Update

Phase IV / V: Prepare to Sell Your Business for Maximum Value!

When should I start?

The ideal time to start the process is 1-3 years prior to the time you think you want to sell. However, if you want to sell sooner than that, there is still time to make an impact, but you should get started right away. 

“The best time to plant a tree is 20 years ago. The second best time is now.” – Chinese proverb

Contact DCA Partners to start your initial valuation: info@dcapartners.com.

 

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