One of the most fulfilling activities in our line of work is when a client asks for assistance in enhancing their company with the intention of selling it when the time is right. We’ve already completed this process dozens of times, and we refer to it as the “Road to Exit.” It’s truly a delight, as it enables us to convey the experience, we’ve amassed over our 36+ years and nearly 800 completed transactions, and to validate it with our peers.
The initial step involves ensuring the company is in good order: thoroughly audited (there’s no need to go overboard as there are always solutions), a reliable management team, trusted advisors, and so forth. Our experience has been astonishing, as addressing these issues is often simpler than it appears—it merely requires prioritizing them.
The subsequent step is to envision the desired or considered type of sale:
- On one hand, it could be a complete sale, a majority or minority stake, with varying levels of debt.
- Another consideration is the investor’s profile, whether financial or a more or less direct competitor.
Each scenario is viewed through the personal preferences of the decision maker, as the future is always yet to be written, and the entrepreneur envisions it based on their own risk perspective and enthusiasm to move forward. At this juncture, the specific experience of our local and international partners in each industry allows us to assist them in envisaging potential scenarios with a high degree of accuracy.
Lastly, analyzing valuation metrics within the sector, extending beyond mere EBITDA, and focusing on areas where our client can relatively easily outperform potential buyers: innovative products, as they’re more imaginative, new markets like Africa or Latin America, and so forth. Aligning the company’s strategy, including executive compensation, with these objectives is paramount.
This process typically spans from 4 to a maximum of 18 months, and the outcome is exceedingly rewarding, consistently resulting in valuations surpassing expectations. Clients often become personal friends through this process and frequently refer us to other entrepreneurs.
Written by Josep Ma Romances, Founder and President of CLOSA Capital
