August 6, 2020
As part of the new section on Exits in the Second Edition of the book (order here), there’s a specific chapter around Preparing Your Company for an Exit. That’s pretty different than Preparing Yourself (last week’s post).
This chapter really focuses on two things. One is how to think about who within your company knows about the possible deal, which conversations you keep private and which you have more in public. I’ll save the details on that one for the book.
But there’s a second topic that’s important as well. And it’s about due diligence and disclosure schedules. What fun! I call it “Begin with the end in mind.” The advice in this section of the book, which is “get a full and complete due diligence checklist from your lawyer before you start a sale process” is something I wish I had done the day I started the company, not the day I started the sale process.
Knowing what things buyers will want to see, in what form, and how well organized, would have influenced me and my CFO to be more orderly about corporate records (things like shareholder votes and board minutes) as well as client contracts. It’s not that we were disorganized, but over 20 years we put things in several different places and didn’t always migrate old records to new systems. When it came time to put together due diligence and load things into the data room, it was a lot more complicated than it needed to be.
As you can imagine, we are doing this very differently at our new company. Even if you aren’t well organized now at your company, put on your to do list some kind of spring cleaning of corporate records. The earlier you do it, the better. Besides, when you first startup you won’t have a ton of details to keep track of so it ought to be easy to do. As you scale you’ll have systems and processes in place as well as, hopefully, ONE PLACE where you store all this information. The time NOT to do it is when you’re in the middle of a very time consuming sale process and simultaneously trying to run your business.