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Two Key Considerations
May 11, 2018 at 12:00 AM
by Dunnington Consulting

You can’t run your business forever – sooner or later you will exit.  From a top down perspective, unless you want to work until you drop, you need to take the time and steps to stage and sequence a smooth and successful exit.

In a previous article, I suggested that building value is the best exit strategy, to optimize what your company is worth. That value has two aspects, two really key considerations. Let’s look at these.


First, obviously, your company needs to be attractive to potential buyers. Financially robust, profitable, positioned with relative competitive advantage in growing markets, strong cash flows, entry barriers, mitigated risks, and so on.  This view of value is well recognized and the subject of any objective due diligence. The more attractive it is, the more likely it is that you’ll find a slate of potential buyers, (or they’ll find you) – and the higher the price you can get.

Virtually all owners overestimate the value of their company. It’s normal. But getting a realistic range or number is essential, takes some frank reflection and is greatly aided by a repeatable, viable valuation approach – something I offer but which is the subject for another place.  See

But this is only part of what’s needed for a successful exit…


If your company can’t readily function without you, it’s not ready for an exit – and neither are you, no matter how tuckered out you might be. When was the last time you took a vacation, or some kind of absence, and things ran well without you?

I know an owner who poured his life into building a business, and finally took his wife to Jamaica for their first vacation (other than a long holiday weekend) in eight years. On day two he was on the phone with the office trying to clean up a problem with a $200k order that was snagged between quality control and customs.

If you own the customer relationships, do all the work with lenders, make all the capital, people and operating decisions, you’ll have to decide if you want to sell it. And how would it be to go to work for the new owner? Frankly, why would they buy a company that couldn’t operate without you?

This, the second key consideration, is also a topic for serious reflection.

If you don’t sleep well, don’t have a business succession plan, aren’t confident in your staff, haven’t worked through risk mitigation scenarios (how likely is XYZ, how serious would it be if it happened, is it getting more or less probable, etc.), if you have no codifed processes or procedures, or if your operation doesn’t include some sort of continuous improvement routines, and you haven’t developed some substantive outside interests…(how’s that for a checklist?)

  • you will have a hard time shopping a company that’s attractive to buyers,
  • the business is not likely to survive its first good idea,
  • you won’t get the best possible price, or even what you’ve been counting on
  • there’s a very good chance you will be profoundly unhappy after transition
  • you may be more likely than not to have to take it back


Neither of these two considerations are instant pudding. Both take time and attention.

To be blunt, it’s essential to regularly work on the business, not just in the business. Here’s a lesson from Google. Years ago, they decided to ask their engineers to spend 20% of their time working on things to improve the company, whether these were central to their job descriptions or not. With no more guidance or oversight than that, this seems (to me) a bit brave, but over the years, their initiative produced g mail, ad words, and a number of other blockbuster outcomes. They have since modified this as they’ve gotten too big to do this the same way.  But it’s deeply a part of their culture to this day. What could your version of that be?

Two points here: working on the business isn’t only for you as owners – get a little help from your friends on the payroll.  You’re paying for their brains, not just their hands. Also, providing some balance between structure and freedom to try stuff is very healthy.

I introduced a variation of the Google program in a company that had grown hand over fist for a couple of years, without routinizing, simplifying, codifying anything. So when the growth tear finally tailed off, we asked people down and across the organization to devote 5-10% of their time to finding better ways, in 90 day project cycles, and insisted they start by focusing on what they did for internal customers …. which proved to be just the right balance of structure and freedom. And we introduced “the grateful customer” awards, an all-employee run recognition program, which gave people permission to say thank you in some very fun ways. Valuable fun.

At the end of the day, both aspects of value management are the owner’s obligation. And while there’s often a guzzillion possible things to improve, including your own pet projects, it’s very helpful to have some discipline around picking a few key, timely, right things in any period of time. In fact, there is no right way to do the wrong things. I have a tool that identifies and ranks improvement projects by ROI. It’s very, very useful for keeping senior teams acting in concert with clarity and alignment on high value matters.

Here’s a point of view, born of success, on connecting results that improve value, with learning that improves people. There is hardly better development than learning to lead value improvement initiatives. If you want to construct learning experiments to see how likely successors would grow into your job, carve off  and engage them in value initiatives to see how they do.

Here are some possible guidelines:

  • Pick high value projects for which there is some importance and urgency. Hard to arouse the energy for improvement on non-issues.
  • Focus sharply on results and learning : “Let’s find out what it takes to (insert a smart goal.) Feel free to carve it into steps.
  • Try to play into what people are ready, willing and able to do – do something drastic and ask them. For your VP Sales, for example, “How could we get sales up 5% in the next 90 days without price cutting?” Which products/services and which channels?
  • Pick things that are doable with a stretch; achievable with existing, or readily-marshalled resources. Be sure to do your part in loading things for success, doing what you can, recognizing that ultimately they’ll be responsible for outcomes. Make sure you place that expectation directly.
  • Be sure to wrap with some kind of assessment: what did we do; achieve and learn from this? What’s the sensible next step?

It has not been lost on me that putting some kind of continuous improvement program capability in place – that invites and helps people find better ways – and which connects value improvement with people development – impacts both the attractiveness of and the readiness for transitions. What’s not to like about that? You might even discover the next generation of leaders.  Don’t forget to take an occasional vacation.

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