Preparing for strategic growth and optimal exit opportunities
Anchor Partners (Anchor) worked with Maven after purchasing several businesses to strategize both a path forward and to better understand how to improve the future market value of the businesses.
Maven’s relationship with Anchor was well-established, as they’d worked together previously on several different companies.
When an investor wants to sell a business, they do everything possible to make the business as attractive as it can be to potential investors, especially as they get closer to exit. The actions taken are, often, cosmetic. Think of it as a real estate agent hiring a home stager to make a house look as lovely as possible, without fixing the foundation cracks or drafty windows.
Private equity firms typically look at various data points to determine the value of a business. Lower customer concentration, growth in end markets, and higher EBITDA margins all lead to higher exit multiples. Preparing a business for sale within 12 months of the sale means that an investor can do very little to substantially change those variables—which means it can do very little to increase the sale price of the business. But by being thoughtful and working proactively to learn which issues will increase or decrease price at the earliest stages of the investment, a company can work proactively to build a business that’s highly valuable to potential buyers.
The first phase of strategy Maven executed for Anchor was to reverse the traditional process by researching, shortly after Anchor purchased the new businesses, which data points would be most important to potential future buyers. With this information in hand, Anchor has a lead time of years—rather than months—to build a business that will be most attractive to potential buyers.
The second phase of strategy was more traditional: Maven worked with Anchor to find ways to scale the business effectively. Maven did this by researching where the businesses currently fit in the market and by strategizing where there were potential growth opportunities, and which practices should be more integrated.
The questions Maven worked with Anchor to answer illustrate an important reason to work with a third-party consultant: sometimes it’s more profitable and efficient to rethink how things are always done.