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November 24, 2022

Strategizing and Executing your Exit for the Greater Good of your Team

Selling a business can be challenging for a founder. Regardless of the reasons behind an exit, there are ways to ensure a company's continuity and success. In this article, Tim Wentworth, Retired CEO of Cigna, formerly known as Express Scripts, discusses how to strategize and execute an exit for a team's greater good. 

"The best way to manage an exit is to have built a great company where the vast majority of the people would want to be part of it, as long as it's sold to the right buyer." - Tim Wentworth

When to Sell the Business

For founders who love their businesses, they are often driven by a vision. The decision to sell is often caused by organic growth limitations that make achieving set goals impossible. They understand that there are many possibilities for their business that they cannot achieve on their own, so they start looking for strategic acquirers. 

When looking for an acquirer, look at competitors. Identifying competitors can help identify the customer's needs and the capabilities required for growth. 

Keys to a Successful Sale

Tim says the most successful sales are businesses built sustainably and managed without an exit in mind. If everyone in the company believes in the mission and is thriving towards it, they will be willing to join the next chapter if the right buyer comes along. 

Strategic buyers often look for a highly-committed management team and a high-performing business that will add value to their current work. Acquirers are willing to pay more for retention because retaining everyone will ensure business continuity. 

How to Prepare for an Exit

When preparing for an exit, keep the sell-side team small. Selling a business consumes a massive amount of energy from employees, and the worst thing to do is to distract the company's core from a sale that might not happen. Instead, communicate promptly and handle employees' anxiety through transparent leadership. Here is how to prepare for an exit in a few steps. 

  1. Obtain strong outside advisors - They will help you understand the company's value. 
  1. Get alignment with investors or the board - Aside from collectively communicating the intent to sell to the board, do it individually. They sometimes raise good questions that could be crucial to the deal.  

      3. Come up with a five-year plan - Create a plan to grow the business. Have a clear view of the current state and what needs to be done to achieve the vision. The           five-year plan will help communicate the deal to the employees and convince buyers of the business’ value.

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