Exit Planning in practice

Exit Planning in practice

There’s a lot of information about exit planning available on our site and others, but here is a real life, practical example. My client is the owner of an engineering/installation business. They have been in their sector for more than 20 years. When I assessed the business (the first stage) they had been in survival mode for the last three or four years. The business was kept alive through the owners' support. Value Drainers: The business model had always been to work on larger projects, as a subcontractor to the main contractors. That had worked well when times were good, but not so well when times became tougher.

My client is the owner of an engineering/installation business.

They have been in their sector for more than 20 years. 

When I assessed the business (the first stage) they had been in survival mode for the last three or four years. The business was kept alive through the owners' support.

Value Drainers:

The business model had always been to work on larger projects, as a subcontractor to the main contractors. That had worked well when times were good, but as times got tougher both the amount of work and the margins they could achieve were squeezed. Financial results were poor.

My view of the business at this point was that it would be very difficult to sell, and command a very low value.

Value Drivers:

Although they had only worked for the main contractors, they had worked on some very high profile sites and projects that command immediate name recognition.

They had invested in their team and retained a strong core of long time, very capable engineers.

They had made significant investments in technical equipment, and are one of very few companies able to carry out a particular form of testing.

The plan:

The business needs to break free from the control of the main contractors and gain its own customers. They have the technical ability to provide their services (we know this from the high profile sites they have worked on) but they have no real marketing or sales skills.

Real gold-dust when considering business value is recurring revenues. They reduce risk for the acquirer and illustrate a long-term relationship with the client base, so we will be offering maintenance services as well as the existing installation services.

We’ve provided a business advisor who is a marketing specialist; they are creating collateral that presents the technical capabilities of the business, testimonials and case studies.

The advisor will follow this with a targeted marketing campaign aiming to attract direct business clients for maintenance and installation services. We will provide a sales resource to help close those opportunities.

If the business meets the targets over the next 3 years, it is my belief that it will be valued at close to £1m.

Please get in touch if you'd like us ti help with your business.

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