Exit Planning

Your focus as an entrepreneur is on growing your business. Exit might not be at the forefront of your thinking.

But when you do decide to sell, you’ll want to be sure you’ve done everything possible to maximise the value of your business.

We know what sells. At Cavendish we’ve developed a unique Exit Planning process that we put in place between 12 and 36 months before the start of a sale exercise. Over the past 25 years we’ve honed and refined this process, based upon our experiences advising on the sale of over 500 businesses.

A great exit requires proficiency in management consulting and corporate finance. Our team is on the cutting edge of both – led by Caroline Belcher, whose decades of international experience have made her the undisputed leader in the exit planning field.

Through our rigorous research, we identity the right buyers for you and help optimise your business from their perspective. That means improving operations, developing a growth strategy, differentiating your offering in the marketplace, structuring management teams in the right way, and hitting EBITA targets. We’ll then position your business to achieve the best multiple.

 

Transformational exit planning: a case study
Express Finance

Express Finance had made its name as a leading UK payday lender when it came to Cavendish Corporate Finance. By conducting an early review of the potential buyer universe, we determined that its most likely buyers were US lenders looking to come to the UK market – who could either build their own platforms or acquire an existing UK player.

That gave us a window to prepare and sell the business of between 18 and 24 months. We advised Express Finance to sell its high street shops and worked to develop a robust, scalable technology platform which could support greater lending levels – the returns on which could be predicted very accurately.

The results were transformative. So successful, in fact, that the ultimate buyer, Dollar Financial, sent its tech team over to confirm the scalability of this new technology platform even before they looked at the rest of the business. The result: a sale of £20m, from a starting point of £2m.

 

 Asking the right questions

Maximising your value for sale means approaching questions from a different perspective to when you’re running a business as usual. Questions such as:

  • Will I enhance the value of my business if I expand internationally?
  • Who’s going to be my successor, and what additions to my management team should I make?
  • Should I make investments that will increase my multiple as well as EBITDA, such as brand investments and when?

The answers are often not straightforward. Especially in the years following the financial crisis, there has been a flight to quality. Purchasers will apply intense scrutiny to your business.

Our job is to know what they’re looking for.

What we do

Maximising value for exit
The Exit Review has three key objectives:

1.       To conduct an external assessment of the business to ensure that the client is focusing on the key drivers that will increase its exit price

2.       To determine the best exit route and position the business in the most appealing way to potential buyers

 

Selecting the right exit route: case study
Hancocks

A specialist confectionary wholesaler, Hancocks has 18 cash and carry depots across the UK, with turnover of £100m.

Prior to working with Cavendish, it has been engaged by its auditors, PwC, to perform a sales process exercise in 2011. This exercise failed.

Hancock appointed Cavendish in February 2012. We suggested the company should look at other avenues of sales it had not explored: international trade and private equity. That meant transforming the company into a deal private equity would support.

In November 2012, Hancocks was successfully sold in a management buyout backed by Netherland-based H2 Equity Partners.

 

3.       To identify any weaknesses a buyer would highlight during the due diligence process

How do we get there? The Exit Review is focused on:

  • Obtaining the highest EBITDA level in the specified time-frame
  • Positioning the business to maximise the multiple
  • Assessing how different buyers will value the business and position it accordingly.

Getting good companies exceptional deals: case study
Scott Dunn

A well-established, recognised luxury brand, Scott Dunn was attracting significant interest from both UK and international PE and luxury groups. A high growth business with growing margins and a very strong, recently appointed, senior management team, Scott Dunn appointed Cavendish on the basis of our track record in securing high prices for high growth businesses and bringing out-of-sector buyers to the process.

Thanks to a defined exit plan, strong internationalist expansion, a successful buy and build strategy, enhancement of the management team, and gross margin improvement, we helped achieved a significant uplift in exit multiple. Though private equity ultimately beat international trade buyers, we kept trade parties were kept in the process to build competitive tension.

The outcome was a sale to Inflexion Private Equity Partners at a premium price – significantly higher than any precedent transactions or the average in the sector.

According to Simon Russell, CEO of Scott Dunn, “Cavendish achieved a superb result for both the shareholders and management team, putting in place all the things needed ahead of the sale then running a highly effective process. In the end it all came together beautifully – and very very quickly”!

  • Managing risks so that they do not affect price

The Exit Review’s key output is a top-level action plan aimed at increasing valuation which includes:

  • Strategic plan (organic growth and by acquisition) and operational improvement plan
  • Plan for positioning the business to optimise the multiple and fit buyer’s strategy including the valuation of potential synergies
  • Actions to reduce due diligence risks are also integrated with the exit plan
  • A review and tracking process to exit to ensure that actions are implemented