September 9, 2021updated 10 Sep 2021 3:47pm

How to maximise the value of an exit

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EY’s Richard Goold shares his insights on the level of scrutiny businesses will be subject to as they ready for sale and how to prepare effectively. 

In brief 

  • The 2021 Merger and Acquisitions (M&A) market is rebounding, but what are the key areas that businesses need to think about in order to attract maximum exit value? 
  • This article looks at the risk of prioritising speed over preparation, how to position the equity story, a new emphasis on culture, and the role of the CFO. 

The pandemic hit British businesses hard, with 9 out of 10 leaders surveyed for the recent EY Global Capital Confidence Barometer reporting a decline in revenue and profitability. Expectations for recovery are high however, with more than 75% of respondents expecting to return to pre-virus sales in 2021. That optimism is reflected in an increasingly active mergers and acquisitions (M&A) market. 

The events of 2020 stress-tested businesses and exposed gaps in strategy, product and market reach. Organisations are now looking to reposition themselves and this is undoubtedly one factor driving M&A activity. 

How can sellers maximise value in this pandemic-altered market? Read Richard’s suggested steps to setting up for a successful exit in the current environment. 

A focus on speed could hurt exit value

Our experience shows that focussed preparation for an exit can lead to a higher return. Despite this companies can fall into the trap of pushing to get a deal done quickly rather than preparing fully. Common oversights include overly optimistic forecasts, management not fully aligned behind plan, diligence being performed too late and a failure to understand level of detail required, as well as management information (MI) and the data room telling different stories. 

A quick and effective health check to assess readiness for a transaction can make a significant difference. Amongst other benefits, it can help shareholders and management gain comfort that the business is ready for sale and that the financials support the disposal strategy. 

How to position the equity story

Once the heath check has been completed satisfactorily, establishing a strong equity story is vital. Acquiring organisations look for consistency. That means consistency in the equity story that is being shared by the board, and consistency in the data that supports it, across management accounts and all forms of reporting and materials in the data room. 

Key questions to consider when establishing an equity story include: 

  • What is the core value story and how supportable is this? 
  • What needs to be done to evidence and model the business in detail, including future revenue streams, product developments and pricing changes? 
  • What data is available to demonstrate key sales metrics such as customer acquisition costs and customer lifetime value? 
  • What needs to be done to prepare robust financial information from the investors’ perspectives? 
  • What are the key value erosion risks and how can these be mitigated pre-deal to protect value? 
  • What constraints could impact the deal process timetable and how can these be managed? 

With these questions addressed it will be easier to articulate an equity story for the next three to five years that considers: 

  • Strategic value, including intellectual property and use cases 
  • Addressable markets and growth opportunities 
  • Scope and approaches to improve metrics 
  • Resourcing, including management structure for growth 

Pandemic disruption has increased importance of culture

The global pandemic has shone a light on the culture of organisations. Acquirers will want information about how staff were managed through the disruption – and how morale has been impacted. Acquisitions can be a testing time for employees and the risk of an exodus of key talent may have increased. There could also be new expectations about working practices. A strong culture creates a more resilient business, and being able to demonstrate that will make an acquisition target more attractive.  

Survey and target possible acquirers

Identifying potential buyers is a fundamental part of the acquisition process. Businesses are often sold to material counterparties such as suppliers, competitors and investors. It’s good practice for every board member to take a step away from the business – at least every six months – and examine the landscape of possible acquirers and consider their perspectives on how value is being created. 

CFO must remove obstacles to an acquisition

CFOs play an absolutely pivotal role in preparations for possible acquisition. The dynamics of an acquisition, after which an entrepreneur may be walking away from a business, means that levels of scrutiny are even higher than those for an investment. The acquirer wants to ensure they are not buying a problem and will look under every stone in the process. Obstacles to an acquisition, such as those discussed in this article on investor readiness, need to be identified at the outset.  

EY has extensive experience in preparing businesses for the acquisition process and ensuring maximum value is achieved. To find out how EY Finance Operations can help you adapt, stay agile and access timely and accurate management information, book a time to speak with one of our team.  


M&A has picked up in 2021 and the battle for high quality among investors has been intensified by the pandemic. Businesses looking to sell should take care not to prioritise speed over preparation, but instead develop a consistent equity story, with financial data that supports growth forecasts, and which reflects the new emphasis on culture as an indicator of resilience.