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Tips for Planning for the Best Exit: When Should I Make My Move?

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The best exits usually come about because of strategic relationship building followed by nimble decision-making. Silicon Valley Bank gathered tips from executives at a range of businesses, from startups to large-cap companies, on how to optimize exit value. Read on to get advice for navigating a successful exit. And read this related article for additional insights on preparing for an exit.

Tips for Planning for the Best Exit: When Should I Make My Move?

When should I make my move? 

This is part of the start-early mantra. If you’ve identified an acquirer or two, you want to have a good relationship in place, if for no other reason, so you know when to be standing at the door when they need you the most. If someone is looking to fill white space, you want to be there with the go-to-market solution. (If you are already part of the stack, you’ve increased your odds.) If you have a customer niche or IP they are seeking, be the first to offer it up.

"Get in before the 'build or buy' decision is made, or you’ve missed the boat"

In most cases, you want to get in before the “build or buy” decision is made, or you’ve missed the boat. The bottom line, advises one large-cap business development manager, is that you want to be in a position in which “you create the process.” If you are close enough to an acquirer, you might even influence the timing. For example, pitch yourself when you learn they want to quickly ramp up revenue or make a big splash at an annual conference.

What can I expect if we start negotiating a deal?  

By this point, you should know what your price is, and why the acquirer wants you. If you have employees to protect, spell out your goals. If you intend to stick around the company or pursue a new endeavor, this is the time to tell them. Keep the number of people involved in the negotiations to a manageable few, for confidentiality reasons.

"Don’t threaten to open your company up for an auction in the middle of negotiations"

Use advisors judiciously. M&A is really about relationships. Beware of bringing in an advisor you don’t already know and find one who knows the history of the acquirer. Pay for the experience. Of course, other strategic acquirers may get wind of your negotiations, and that would be a good thing. But unless you are the hottest company around, don’t threaten to open your company up for an auction in the middle of negotiations. The corporate dealmakers say overconfidence kills a deal faster than almost anything, except a surprise.

What will I need to disclose? 

Everything. Every company has some deficiency. Acknowledge it and your plan for dealing with it. The potential acquirer’s CFO can run the same financial analysis you can and almost certainly has sources on the street who will spill any beans about you.

"The #1 deal killer is a surprise."

You’ll need to disclose the same kinds of information you would share to secure funding, including financial projections and marketplace analysis. Expect to hand over any documents reporting your company’s financial statements and records, as well as articles of incorporation and company bylaws. Remember: the #1 deal killer is a surprise.

Related Content

Read more about optimizing your exit value: Tips for Planning the Best Exit: Set Yourself Up for Success.

 

This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. You should obtain relevant and specific professional advice before making any investment or other decision. Silicon Valley Bank is not responsible for any cost, claim or loss associated with your use of this material.

About the Author

As the Senior Market Manager for Silicon Valley Bank, Robert oversees all Relationship Management activities for the markets located in the Southwest, MidWest and Southeastern United States. Robert works closely with the teams in the various markets managing the key relationships with clients, VCs, PE Firms and key business partners. Today, Robert and the teams in the markets that he covers works with over 2000 innovative technology clients.

Robert joined SVB in 1999 when he opened the Dallas office for SVB. He worked out of the Dallas office until 2014 holding various roles for the bank. In 2014, he moved to Austin and established himself as a business leader in the technology community and took his current role. Over the years, Robert has served on various technology ecosystem and charitable boards. Prior to joining SVB, Robert was a commercial banker for JPMorgan Chase in Dallas for 13 years including 3 years as their Dallas Tech practice lead. In his spare time, Robert enjoys running in Austin and hanging out with his wife Cory and his two daughters that are in college at the University of Texas and the University of Oklahoma which makes for an interesting family dynamic college football season.

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