Missed Opportunities – Knowing When it’s Time to Exit

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Every entrepreneur dreams of the successful exit. Is your time now or should you wait? In business, there are windows of opportunity to capitalize. More often than not, the opportunity occurs within a small time frame. 

The question is are you ready when the opportunity it presents itself? 

Having worked with many founders and investors, articulating the time to exit, is the most difficult decision for many entrepreneurs. It gets even more difficult when you have emotionally connected investors tied to the company. (Part VI Bad Investors)  

Nevertheless, there are times to act and there are times to sit idle, but as the saying goes Patience is a virtue, but Greed is a Sin and emotional investors get greedy when it’s time to sell.  Emotion complicates common sense. Others know this as the saying “Pennywise and pound foolish”.  

To identify when you believe the opportunity is presenting itself or whether not it’s the right time to execute the sale of your company is your team’s decision. The best time to sell your company is when your largest competitors are moving and growing in the market.  If they come calling you should absolutely listen. As a founder or Sr. leader it’s your duty to see these trends and try to identify why the time is now.

You can create strategic value in your company in a number of areas such as a technology enhancement, access to a growing market niche, teaming with a strategic partner to cross-sell and up-sell to each other’s install base for example. 

Larger companies do not want to lose to their smaller competitors. They see this as an attack on not just the little niche, but an attack on the mother ship. And there is no better time to sell when they come calling.  But miss that opportunity and they will play another game. Deploying their resources to make you go away in a different way.

Review some of these common mistakes to help you identify why the time may be now to sell your business:

Waiting too Long

It’s natural to believe that the company will continue to grow. And yes there is a chance of this. However, your must remember that your company’s value is not based on just what is in the financial statements. The market itself dictates the worth of your company. There are several factors that could determine this, such as:

  • Product evolution
  • Market Competition
  • Industry’s propensity to buy other companies

Strategically you must always be thinking about timing. Waiting for that next sale or next partnership for another little milestone before you sell could actually cause your window to close and the environment to change around you in the blink of an eye….. Take Control and Seize the opportunity in front of you.

Company Value

As a founder or Sr. Leader of the company nobody will understand the company’s value better than you. Its your duty to make your investors understand the true value of your company.  

Potential buyers will come in with a very good sense of what you are worth. If you wait too long you could devalue your true worth. Your market value could be driven as well by many factors such as:

  • Revenue
  • Sales projections and/or growth trajectory
  • Strategic value-based on corporate relationships
  • Product Scalability 

If you take an industry-wide view and you are seeing factors devaluing the company’s worth, you are doing the company a disservice by not acting and moving the company to a place where the people and the technology could succeed.  

“Every product or service has a natural consumption level. We just don’t know what it is until we launch it, distribute it, and promote it for a generation’s time (20 years or more) after which further investment to expand the universe beyond normal limits can be a futile exercise.” —Thomas G. Osenton

Misunderstanding the Buyer

In previous posts we talked about Persona’s and Customer Discovery.  Understanding your audience is the first of many steps to selling your solution.   Well, Guess what; It applies to selling your company as well.   

Not all buyers are looking at the same things you may see. If you are working against competitors, put yourself in their shoes.  Painting the picture for them on why they need to act now to buy you is just like selling your product. Miss this opportunity with items mentioned above and you could an face other changing pressure such as:

  • Changing Market Landscape or New Competition  
  • Customer Cancellations
  • Product and Company Scalability 

Watching these market shifts carefully could be a signal to prepare for a tough battle or an early exit opportunity. 

In a small company, there are always financial challenges to scale the organization.  There comes a time where the money to scale outweighs the opportunity cost to gain market share. Stay in front of your opportunity and close when the time is now!

Last modified: August 4, 2019

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