Every private equity firm out there, when they make an investment and acquire a company, they are already thinking about their end game – their exit strategy. The primary goal of most private equity firms is, in fact, exiting a company and making a profit. All the things they do with the business in the meantime is all about improving, and growing the company to make a sizable ROI once they exit.
As much as the process of acquiring and growing a company matters a lot; so does the exit. Private equity firms need to be able to prepare a company for selling which is why the whole process involves a well thought out and clear-cut exit strategy.
Exits are no longer as easy as before because buyers are becoming more and more sophisticated and methodical in their purchases, and thus several things need to be done to make a sufficient return on investment in the end:
- The management needs to be able to prepare for the exit and the transition that comes after, all the while continuing to capture value for the company.
- The management also has to focus on addressing the potential problems that might occur or get pointed out by the buyers, and give timely answers and solutions to all of them.
- You have to perform a readiness scan as early as 18 months before exiting.
We at Consero are quite aware of how difficult all of this can be, and thus we aim to help in any way we can with our robust finance and accounting solution.
So how do we help you prepare the company for an eventual exit? How do we make our part of the process streamlined and easy?
The assistance we provide
Consero assists companies, CEOs, CFOs, and investors in all financial and accounting matters through our time-tested processes.
When it comes to your exit strategy, we aim to help with our implementation.
At the very beginning of us working together, we are:
- Defining all of the accounting processes
- Creating all the procedure documents
- Documenting all of the accounting policies and procedures
What this exact level of documentation does is allow Consero to be efficient in the process but also to be ready for an audit or due diligence at any given point in the future.
Consero knows that both acquisitions, as well as exits, can be daunting on the finance team, which is why we aim to assist them in the process or by taking over most of the tasks that they can’t handle.
Some of our clients have even told us that because their books are so buttoned up, they’re convinced that they have received a higher evaluation because of Consero.
In essence, private equity firms can rest assured that in those first 30 to 60 days, we are getting ready in all the ways we previously mentioned and more. We can support with any funding event, including exits, audits, or future acquisitions.
What happens after the exit
One of the main things private equity firms also ask when they decide to work with Consero is:
If we’re working with Consero and we go through a transaction, or a portfolio company gets acquired – what happens then?
In such instances, there is usually one of three possible things that can happen:
- After we successfully and very smoothly go through due diligence, the acquiring company will see how buttoned up the finance & accounting function is. After that, at the end of the process, that same company realizes that Consero is a more efficient and cost-effective solution than building it in-house. They also decide to start working with Consero. In essence, what happens here is that Consero eventually ends up with two clients instead of the existing one we had at the beginning of the process. It is a development that happens quite often for us.
- In the case where the portfolio company gets acquired by a strategic buyer which has an existing accounting and finance team, together with specific software that’s used – the whole process goes much faster. With only a 60 days notice, Consero rolls all the data into the new company efficiently without the new company needing to do anything on their end.
- The last possibility is for you to maintain everything and keep the software stack that you have been using with Consero. In that case, we only need to flip a switch, and you can become directly billed. That way, the new accounting team can do all the processing in the third-party systems that Consero uses as well.
In the end, we hope that all of this shows how practical and useful our services can be for private equity firms when they want to prepare a portfolio company for an exit. What’s more, we can help during the acquisition and growth of the company as well. If you would like to discuss how we can help your firm, contact us today.
