Exit Strategy…

Kerry Packer

Exit Strategy…

“Always have your business ready for sale. You might not get more than one chance. Not everybody gets an Alan Bond in their life.”

Kerry Packer (late media owner and billionaire)

The late Kerry Packer sold his TV business to corporate raider Alan Bond for over $1billion in 1987 (far more than it was worth) then bought it back 3 years later for $250million. He was not expecting the sale but sold because it was too good an offer to refuse.

“Begin with the end in mind”. This is habit 2 in the late Steve Covey’s Seven Habits of Highly Effective People and it is important when you start or buy into a business.

What is your end game?

What do you want to achieve and where do you want to be in ‘X’ years’ time?

I bought into a business over 15 years ago with 3 other partners. In purchasing the business, the seller who was our former employer advised us to have an exit strategy with a time limit. This was noted and promptly forgotten.

As the business grew there were the usual tragedies and triumphs.  After 10 years I suggested we needed to get the business in a ‘sale ready’ condition. However with business partners with differing priorities this did not eventuate. It’s not that we needed or wanted to sell the business, just that it was because, like the late Kerry Packer said “You never know when a buyer will come along”.

Without warning a potential buyer did come along and we were not ready. It was a disaster. The potential purchaser viewed a somewhat disorganised and business and quickly lost interest.  An underlying issue was the lack of a shared vision in the management team and unclear agendas.

Did we learn anything from our first approach by a potential buyer?

A little bit, but not enough………..

Less than 2 years later we were approached by a large multi-national company wanting to buy the business. This time were a little better prepared. The negotiations dragged on for over 9 months and eventually it failed for a number reasons. These reasons included legal complexities to do with selling the business versus selling the company (this had significant financial implications), the final offer and performance guarantees.

I was disappointed that we had missed another opportunity.  At our debriefing meeting, I identified what I believed were the reasons for the sale falling through:

  • no professional assistance from a corporate advisor (the potential purchaser had an entire M&A department),
  • no legal or tax advice
  • no timeline.  

There were however, some positives that came out of this experience. The business had now been ‘tidied up’ and was in a more saleable position. After considerable discussion, it was then agreed to engage an advisor, seek financial and tax advice and agree on a timeline should a buyer emerge.

The engagement of the corporate advisor was critical. They helped take the emotion out of the process, kept to the plan, prepared professional sale documentation, co-ordinated the various parties including the accountant and lawyers and sought out potential buyers. The business was sold successfully to an offshore company with conditions and a price that far exceeded our expectations.

Our Alan Bond moment.

The corporate advisor uncovered and highlighted the Value Drivers of the business. For further insights into exiting a business I recommend reading a blog by exit expert Kerry Boulton.

In hindsight, perhaps the failed sales helped us……….you can be lucky and learn from your mistakes.

So is your business ready for sale (and are you?) just in case an ‘Alan Bond’ comes along with an offer too good to refuse?

One thought on “Exit Strategy…

  1. Pingback: Nothing is easy…… | 5-Dimensionz

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