• The process of preparing for exit starts on day one of a PE-backed CFO’s tenure.
  • The CFO plays a crucial role in ensuring the financial narrative conveyed to potential buyers is both credible and compelling.
  • For portfolio company management, leading a sale is an arduous journey that often takes several months to complete and is equivalent to a second full-time job. CFOs who enter this critical stage with mastery of their numbers and a deep knowledge of the business are better poised to help deliver an impressive exit.

The realization of a successful exit to a strategic or financial buyer remains the standard end game for an LBO.

While an executive’s actions in the months or years preceding a sale heavily influence baseline exit valuations, their actions during the final stages of an ownership change also have a significant impact on the definitive sale price.

Exceptional leaders implement systems and processes to render a business “data room ready” well in advance of a potential sale. Understanding what metrics may be of interest to potential buyers and tracking those over the duration of the hold can help a company command a higher multiple at exit. Other proactive initiatives may include conducting an internal quality of earnings assessment in advance of a genuine diligence process to further prepare the team.

Finance chiefs play an irreplaceable role in clarifying the financial narrative of the business and rallying the rest of the executive team around a single portrayal. Senior management must convey a message to potential buyers that is both accurate and compelling and ensure answers to common queries are not contradictory or undermining. 

PE-backed executives utilize several best practices leading up to and during the sale process that contribute to a rewarding exit.

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