Business Exit Preparation

Business Exit Preparation with an FD or CFO

Preparing for a founder or investor exit isn’t a 6-month decision. Most companies lay the groundwork for a successful business exit two to three years in advance. Whether your company is going for an IPO or being purchased by a third party, you want to get your finances to present the company with a positive investor story.

An FD or CFO is the glue that holds your business exit preparation together, becoming a point person to lead on the process. FD Capital is uniquely positioned to help your company with its business exit preparation by recruiting an FD or CFO to oversee the process.

Business exit preparation is one of our specialisms at FD Capital with our recruiter team made up of financial professionals and entrepreneurs who understand the challenges faced when navigating a successful exit.

What is a Business Exit Strategy?

A business exit strategy is a company’s strategic plan to sell its ownership to investors or another company. Exit strategies can also include transitioning from private investment to taking a company to an initial public offering (IPO).

An exit strategy allows business owners and investors to liquidate their stake in the business and limit their loss or pocket their profit. Venture capitalists and private investors will utilise a business exit strategy to cash out on their investments.

The Most Popular Business Exit Strategies

A CFO or FD will navigate a company’s exit strategy, usually choosing between the five main exit strategies in the interest of the organisation’s leadership and investors.

  • Employee Stock Ownership Plan (ESOP): the company’s employees either purchase stock directly, obtain it through a profit-sharing plan, or are given company stock as a bonus.
  • Initial Public Offering (IPOs): a privately owned company will exit its third-party funding arrangement or current ownership by listing its share on a stock exchange to be purchased by the public.
  • Transfer to family ownership: the legal ownership of the company is passed to the family when the owner exits.
  • Management buyouts: the company’s management team sources a financial backer or resource to purchase part or all of the company.
  • Outside sale: identifying an external buyer to purchase and manage the company.

How Investors Exit a Company

Not every business exit preparation will involve navigating the exit of the company’s entrepreneur or owner. Most exit strategies involve navigating the exit of private investors at the end of a deal, following the merger or acquisition of the company, or its listing at IPO. CFOs and FDs will strive to create a positive investor story that encourages future investment and maintains the company’s reputation.

  1. Share sale: certain private investors will prefer to exit a company by selling its shares to a third party. Angel investors typically use this business exit strategy, selling their shares to a private equity firm or venture capitalists. It’ll require a hands-on approach with earlier investors usually wanting the new investors identified and lined up before securing their exit.
  2. Trade buy-out sale: a company will prepare to exit its private investors when it has built the company into a sizable position to attract bigger organisations for a trade buy-out or larger investors.
  3. Initial Public Offering (IPO): a company will exit its investors and step onto the public market through an initial public offering. It allows early investors to sell their portion of the company for a profit as part of a full or partial exit.
  4. Management buy-out: investors can exit a company by selling their shares to another party, including back to the business itself. A management buy-out exit involves the company’s management team purchasing its assets from third parties. This exit strategy is usually chosen by larger companies and involves significant sums of capital.

When Do Investors Exit Companies?

Investors will choose to exit a company at different times and for their own reasons. Much of this depends on the investment strategy they’re operating on and whether they’re exiting to pocket a profit or mitigate losses. A CFO or FD will oversee the business exit preparation with investor concerns in mind.

  1. Angel Investors

Investors work on their own time scale when deciding when to exit a business. However, angel investors typically work with companies for longer than other private investors. Many will work alongside a business for up to 8 years to support its growth with their exit strategy being more long-term and planned out.

  1. Private Equity

Most private equity investors will be looking to exit a business within five years. Many choose to invest in more established companies that intend to build upon their existing success with a view of selling the company at a profit. Alternatively, they may choose to invest in a company going through a rough patch if they believe the organisation has a strategy to become profitable.

  1. Equity Crowdfunding

Equity crowd funders will have different motives for investing in businesses, which impacts their exit strategy. Some investors may want to exit the company when a product has completed development or when it has reached a certain goal.

Most equity crowdfunding has a multi-year strategy, but some have been able to exit within less than 12 months. AB acquired Camden Town Brewery in 2015, eight months after it raised £2.75 million by crowdfunding through Crowdcube.

  1. Venture Capitalists

Venture Capitalists (VCs) typically take a longer-term approach to investors than their private equity counterparts. VCs will want a similar exit to private equity houses but typically invest in the business at an earlier stage of its development and growth. Most VCs will expect to be involved in the business for 5 to 10 years as the company grows.

The business exit of a Corporate Venture Capital (CVC) deal will differ as there are often several motivators behind the investment. CVCs may invest in a company to utilise its technology, grow its corporation, or innovate the business. Once a CVC’s goal has been achieved, it’ll look at a business exit strategy.

Business Exit Preparation Strategy

Finance Director

How can you improve your company’s chances of having a successful business strategy? It’s all in the preparation. CFOs and Financial Directors specialise in business exit preparation, putting companies in the right position for a successful exit that boosts their public image and creates an engaging investor story.

A CFO or FD will focus on maximising the company’s valuation by creating a growth story with financial evidence to back it up, underlined with KPIs and management information.

These are a few ways that a company can prepare for a successful business exit:

  1. Setting exit objectives

Value maximisation is one of the major objectives of a business exit strategy. However, it shouldn’t be the only objective of your business exit. Companies should look at their long-term goals as it transitions into the next phase of their life cycle, whether it’s maintaining their company culture or ensuring confidentiality.

Setting exit objectives allows your company to work backwards and ensure that the leadership team has the right amount of time and resources to deliver on the exit strategy.

  1. Getting accounts in order

A business exit requires a company to have its accounts in order. Accurate accounting ensures that a company is not undervalued, and that potential investors and partners can make an informed decision.

Most companies will choose to hire an FD or CFO two to three years ahead of their desired exit to overhaul their financial systems and accountings. This timeframe also provides companies with the opportunity to boost their profitability and identify methods of value creation.

Companies lose credibility when they’re not on top of financial reporting or when their numbers are found to be inaccurate. Financial accounting is one of the most important aspects of business exit preparation and may require your systems to be overhauled and updated.

  1. Value creation in SMEs

Part of your company’s exit strategy should be value creation in the two to three years before a sale, IPO, or acquisition. Investing in a CFO or FD will provide your company with a strategic leader with the financial knowledge to put systems and technology in place to identify and grow your business strengths.

A CFO or FD will take a top-level view of your finances and provide an unbiased assessment of your current position.

  1. Guideline on business valuation

Establishing a guideline for business valuation is crucial for determining your overall business exit preparation strategy. A CFO or FD will access your company’s financial position to determine a realistic business valuation and identify opportunities for value creation. Getting a business valuation guideline can enable a company to determine whether it wants to continue with the exit or delay its exit to focus on boosting profitability and value.

  1. Investor story and sales pitch

A CFO or FD will create an engaging investor story with a sales pitch that showcases your company’s potential and where it’s going in the future. You’ll want a charismatic leadership team who can paint a positive story and translate the company’s financial position and forecasting to investors and stakeholders who aren’t necessarily financially fluent.

What a CFO or FD Brings to a Business Exit

Preparing for your business exit requires investment in your financial and strategic team. Recruiting a specialist CFO or FD will enable your company to put its best foot forward, boost its valuation, and complete a successful business exit that takes it to its next stage of development.

Private equity-backed exits are on the rise in Europe with CFOs and FDs uniquely positioned to oversee business exit preparation, enabling company CEOs to focus on the day-to-day operations.

A CFO or FD will take on four roles during business exit preparation:

  1. Catalyst

They’ll be a catalyst for change in the company, thinking outside the box to deliver change and a fresh financial strategy. CFOs and FDs will utilise IT systems, technological investment, and overhaul existing systems to deliver change.

  1. Steward

Most CFOs and FDs will also fill the responsibilities of a financial controller and are responsible for delivering the company’s financial reports. As a steward, they’ll support the business exit preparations by producing accurate financial reporting and ensuring regulatory compliance with internal controls.

  1. Strategist

A CFO or FD is a strategic partner to the company’s leadership team, providing financial support and using their industry knowledge to promote better decision making. Our specialist CFOs and FDs have experience overseeing debt refinancing, mergers and acquisitions, and stakeholder engagement.

Evidencing and articulating the company’s growth and development story is a critical part of a CFO or FD’s role during the exit process. Potential trade buyers and shareholders, along with investors, will look to the CFO or FD to provide accurate financial reporting and balance on the company’s outlook.

Having a senior financial executive on your team will provide your company with credibility with traditional financial institutions and investors.

  1. Operator

While a CFO or FD will lead business exit preparations, they also act as the company’s financial operator. They’ll ensure that there is quality management information with cash and working capital management. Recruiting a CFO or FD two to three years before the business exit will provide your company time to overhaul and redefine its financial functioning.


How FD Capital Can Prepare Your Business for an Exit

The best investment a company can make in its business exit preparation is to recruit a CFO or FD, either on a part-time or full-time basis. At FD Capital, we work with companies to identify the most suitable candidate to support their company to the next stage of its lifecycle.

While most companies will put a premium on CFO candidates with prior IPO or acquisition experience, we advise choosing a candidate who can deliver throughout the exit process and understands your industry.

FD Capital are the UK’s leading financial recruitment agency with a portfolio of CFO and FD candidates with a proven track record of delivering successful business exits.

Start recruiting your IPO CFO today by contacting FD Capital at or 020 3287 9501.

Business Exit Preparation

Here at FD Capital Recruitment we specialise in London and FD’s and CFO’s are all we do, so you can be certain we understand your requirements and can find you the perfect candidate for your role and business.

Let us find the perfect FD or CFO to support your business exit today.

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