Exploring your options to realise value


What are my options for an exit?

Rob Donaldson: There are three options for a private shareholder to consider their exit route one is sale to a trade or strategic acquirer, so a trade acquirer is a direct competitor a strategic acquire is someone who operates in an adjacent area that has a reason to buy. A second route is an IPO so that's a listing on the main market or on AIM, my colleague Diane Craig will talk about that little later on in this video and the third option and perhaps the one that's least well understood is a sale to a financial investor or a private equity investor. Now that can be a full sale, in a similar way to a trade or strategic acquirer or it can be a partial realisation where you sell some equity now, where you retain perhaps a majority stake in the business or a very significant stake you keep running the business and in three, four, five years' time there's another exit event at that point.

When is the right time to explore an exit route?

Rob Donaldson: The right time to look at an exit route, ideally, is when the business is performing well, when the sector that the business operates within is in good shape and when the economy is performing strongly. If you can green light all three of those things then you're in a very powerful position but actually getting all those things aligned at the same time is not that easy. The most important one is that the business is performing so it's trading well and its forecast to continue to trade well. Don't wait until the business has peaked, more business owners in my experience hold on too long than go too early.

How can an IPO realise value?

Diane Craig: A public market listing or an IPO can be a great way for a company to realise and create value. However it shouldn't be treated as our exit on day one for the founders, there may be some scope for some cash to be realised at listening but what an IPO does do is allows companies to raise capital to create shareholder value in the medium term.

When is the right time to perform an IPO?

Diane Craig: The key on the right time is to be able to maximise the value on the listing. New investors will look at factors such as financial track records, calibre of the management team, competitive strains and the strategy for future growth of attractive levels when gauging the valuation.

How important is it for shareholder aspirations to be aligned?

Rob Donaldson: It is important that the aspirations of the shareholders are aligned with that of the business and you can sometimes reach a situation where perhaps, through the innate caution of the shareholders as so much of their wealth is tied up in the business, that they actually begin to hold a business back. That can be a sign that it's the time to consider some form of transaction whether that's through the discipline of an IPO, whether it's the new ownership that a trade buyer might bring or it's the change in structure of a private equity deal all of those things in some ways can reinvigorate a business whilst at the same time allowing a shareholders to take some money off the table.

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