Exit Plans and Strategies
Former Melbourne Angels member Dr Tom McKaskill is an authority on how entrepreneurs start, develop and harvest their ventures. He is an internationally recognised expert on exit strategies for high growth enterprises. His experience includes multiple start-ups in the UK and USA, raising venture capital twice, undertaking two acquisitions and strategic trade sales of three businesses. Previously holding the Richard Pratt Chair in Entrepreneurship at the Australian Graduate School of Entrepreneurship, Dr. McKaskill is the author of 14 books covering such topics as new venture growth, raising venture capital, selling a business, acquisitions strategy and Angel investing. You can download some of Tom’s highly acclaimed books here and we recommend to every entrepreneur that you read at least one of Tom’s books.
- Invest to Exit
- Ultimate Growth Strategies
- Ultimate Exits (and Ultimate Exits – Workbook)
- Ultimate Acquisitions
Dr. Tom McKaskill
Breakthrough Publications, 2009, Australia. (279 pages, 1.9 MB)
Investors in early-stage ventures need to focus on strategic exits if they are to achieve a high return on their investments. This book explains the characteristics of strategic value, how the investor should negotiate the investment and how they should manage the process to a strategic trade sale. The book includes detailed discussion of the problems of high growth ventures, the unrealistic expectations associated with IPOs and the advantages of investing in strategic value ventures.
There is a detailed examination of the investment and exit opportunities in financial and strategic ventures. Underpinning the creation of value in both of these ventures are the drivers of high growth potential. Businesses which create value by developing an asset or capability which could be exploited by a large corporation achieve an exit through a trade sale to a strategic buyer. Strategic value is created through intellectual property, or deep expertise, which creates a sustainable competitive advantage in the hands of the strategic buyer. It is the strategic buyer who exploits the growth potential through superior resources, capabilities and/or market power.
The book provides a detailed explanation for preparing a business for a strategic exit based on a detailed analysis of the product or service characteristics which create strategic value, a set of guidelines for identifying strategic buyers and processes for setting up the investment deal and the strategic sale.
The major recommendation in the book is that Angels and VC investors should focus on strategic value investments. These investments have very focused exit strategies which generally have lower execution risks, shorter time scales and higher returns than financial trade sale exits, or IPO exits.
The book has 15 chapters covering the following:
- Begin with the end in mind
- High growth – high risk
- Spot the IPO
- Financial vs strategic exits
- Threats and opportunities
- Identifying strategic value
- Finding strategic buyers
- Enabling the opportunity
- Reducing risks to the buyer
- Setting up the exit deal
- Evaluating potential investments
- Executing the exit strategy
- Structuring the trade sale deal
- Selecting professional advisors
- Conclusion – impatient capital
“This book is a must read for the Angel Investors who wish to have profitable exits.”
Chairman Emeritus, Australian Association of Angel Investors
“Every entrepreneur seeking to work with outside investors should first stop, read Invest to Exit, and then proceed.”
Chair Emeritus, Angel Capital Association, USA
Co-author, “Every Business Needs an Angel” Crown Business:2001
“Tom McKaskill’s insights into the ‘art of the exit’ provide a great roadmap for all Angel and Venture Capital investors. “
Joe Platnick, Pasadena Angels, USA
“This is a valuable read for the first time entrepreneur or investor, as well as for those of us with more experience.”
Founder/Chairman Melbourne Angels,
Co-Founder/Chairman Emeritus, Australian Association of Angel Investors
Chair, Asian Business Angel Forum
Trustee, The Angel Resource Institute
“Invest to Exit is a must read for the Investor looking to maximize their returns from their private equity investments.”
Chair Gold Coast Angels
“This book emphasizes tactics-backed strategy and focuses the reader on drawing the narrowest line between an investable exit and the present.”
Repertoire Management, New Zealand
“In my view, the book should be compulsory reading for all entrepreneurs and inventors who should work through the book before fronting investors. “
Ergad Gold – Principal and Executive Director
Momentum Investment Group
“This is compelling reading for investor and companies alike as they work collaboratively to achieve a superior result when they sell.”
Sparkbox Investments Limited, New Zealand
“Tom is undoubtedly one of the foremost thinkers on what it takes to achieve strategic value in a business. I strongly recommend Tom’s latest book for all investors looking to profit from a strategic value mindset.”
CEO EQ Capital, Australia
Dr. Tom McKaskill
Breakthrough Publication, 2010, (162 Pages, 1MB)
Proactively driving high growth is a mystery for the vast majority of entrepreneurs. With no model of the driving forces of high growth to guide them their efforts are often frustrated when they overlook basic principles that underpin growth strategies.
Entrepreneurs need a full understanding of the interdependence of the factors inside their business and their external environment that provide growth traction. High growth is certainly possible but it only happens when the entrepreneur correctly positions the business within the target market and implements strategies inside the business to activate the growth potential.
Growth occurs when there is a match between external and internal business conditions. The lessons of history show us that there are many aspects of the business that have to come together in the right way at the right time for the business to have, and then to realise, growth potential. A business weak in any one area, will struggle with overall performance of the entire strategy – this is why sustainable high growth is so difficult to achieve. However, the entrepreneur that has a good understanding of growth principles, has a much higher chance of driving both higher profitability and higher growth.
This book sets out a practical and structured treatment of the elements of business management and product/marketing positioning which facilitates high growth. It is based on well-known growth theories, the author’s personal experience and the successes of the venture capital sector.
The purpose of this book is to enable entrepreneurs to identify the critical business principles that drive high growth, to provide them with a means to measure their growth potential and to help them understand what they have to do to significantly improve their growth prospects.
In 16 pragmatic chapters Tom sets out 14 Principles which drive high growth.
The High Growth Wheel of Success
Avoid the major Flaws
Principle 1. Finding the right place, right time
Principle 2. Developing a clear vision
Principle 3. Innovation as the driver
Principle 4. Finding the compelling need to buy
Principle 5. Targeting the right customer
Principle 6. Achieving a clear competitive advantage
Principle 7. Building in sustainability
Principle 8. Developing channels to market
Principle 9. Creating robust margins
Principle 10. Engineering scalability
Principle 11. Assembling a capable management team
Principle 12. Working the numbers
Principle 13. Managing risk
Principle 14. Pulling it all together in a plan
Appendix 1: Growth Theory
Appendix 2: Growth Potential Index Table
“Prof Tom McKaskill provides Australian entrepreneurs and business leaders proven international experience as a successful entrepreneur and researcher/academic. These unique perspectives are captured in an integrated blend of experience and thought leadership in Tom’s new book targeted at building winning ventures. It’s a must read about what really works to build a high growth business that demonstrates resilience and commitment to build stakeholder value.”
Greg Loudoun, Founder and CEO, Acumen International Pty Ltd
“Winning Ventures combines Tom’s personal experience with a succinct framework to deliver a practical guide to surviving high growth that is as applicable to large corporations as it is to start-up ventures. Valuable reading for any entrepreneur that doesn’t wish to join the many that are a victim of their own success!”
Chris Gadsden, Director, Generation Capital Group
“This book fills an important gap – providing clear and helpful guidance to would-be entrepreneurs. It is written in an accessible style, and the key information is supplemented by illuminating examples and questions to keep the reader focused and interested. It offers an excellent overview and practical framework, and one that makes the size of the entrepreneurial challenge clear, and yet achievable.”
Peter Sheldrake, Professor of Business Entrepreneurship, Graduate School of Business, RMIT University
“Do you want the excitement, challenge and rewards of a high growth business? This book is an invaluable, insightful, practical and structured framework for the novice and experienced business owner. Not only will I be using it in my businesses, I actively encourage my clients to use the book.”
Adam Hodgson, Phigit Consulting
“Winning Ventures provides a wealth of insight into high performance and high growth businesses. By providing a combination of research and practical experience, Tom McKaskill has created a step-by-step checklist for any business owner to prepare for high growth. The Growth Potential Index is a great self-assessment tool, to realistically measure the current position of your business.
As an owner of a Web design & development company that has grown an average of 50% p/a for the past five years, Winning Ventures has now given me ideas and strategies for continuing our companies growth into the future.”
Tim O’Neill, Director and Co-Founder, Reactive Media
Dr. Tom McKaskill
Breakthrough Publications, 2010, (286 Pages, 1.4MB)
eBook Download Here
Workbook Download the Workbook Here
This book provides a detailed examination of the exit preparation process in financial and strategic ventures. Underpinning the creation of value in both of these ventures are the drivers of high growth potential. In the case of a financial venture, the business itself must create the business model to exploit the growth opportunity. A financial business must build an organization which is capable of delivering a robust business to the buyer which enables the buyer to exploit its revenue growth potential.
Businesses which create value by developing an asset or capability which could be exploited by a large corporation achieve an exit through a trade sale to a strategic buyer. Strategic value is created through intellectual property, or deep expertise, which creates a sustainable competitive advantage in the hands of the strategic buyer. It is the strategic buyer who exploits the growth potential through superior resources, capabilities and/or market power.
The major recommendation is that entrepreneurs need to prepare the business for sale by focusing on the manner in which the buyer will extract value from the business. Understanding how value is created, how buyers perceive risks in the business and how buyers will exploit the potential are the drivers of a preparation program for selling the business.
Business owners, entrepreneurs and investors are locked into an old paradigm about value creation being based on proven profitability. But this is not what acquirers are evaluating. They are looking to the future and assessing what return they will achieve on their investment. Thus it is the future potential of the business which is much more important than its past. As soon as we accept this view, we can be proactive about creating a future which can deliver a much higher value to the buyer than what can be shown from past results.
Business which are valued on inherent profitability should focus attention on taking risks out of the business, improving their sustainable profitability, increasing their growth rate and identifying ways in which the buyer can harness new potential. Those businesses which can deliver high growth potential through intellectual property, or deep expertise, should focus on the strategic value in their business. This type of business can achieve staggering exit values by selling to a large corporation which has the capability and capacity to fully exploit its strategic value.
The book has 17 chapters covering the following:
- Forget the multiple
- Strategic vs financial exits
- Leveraging the financial model
- Increasing sustainable profits
- Build a platform for growth
- Finding financial buyers
- Threats and opportunities
- Identifying strategic value
- Finding strategic buyers
- Sustainable competitive advantage
- Enabling the opportunity
- Reducing risks to the buyer
- The acquisition process
- Deal structure
- Selecting professional advisors
- Other considerations
“To get the ultimate deal you must put yourself in the buyer’s shoes and seek to reduce business risk and increase growth potential. In the current market the benefit of this approach cannot be overestimated. Tom has set out a practical step-by-step process to extract maximum value from the sale of the business.”
Ian Knight, Partner, KPMG, Corporate Finance Practice, Australia
“Ultimate Exits is the ultimate book for entrepreneurs – don’t even think about selling your business without reading it.”
Tony Featherstone, former Managing Director, BRW magazine
“A compelling read with lots of practical examples. This book turns conventional valuation methodologies upside down.”
Martin Checketts, Partner, Mills Oakley Lawyers, Melbourne, Australia
“Tom McKaskill takes years of detailed research coupled with real world experience and boils it down to fundamental approaches which are actionable and effective for any business. For anyone who dreams of selling a business at more than fair market value, Tom McKaskill offers proven strategies to do so. While exit advisors are on every corner, Ultimate Exits shows you how to get there at values of which you never dreamed. In my 35 years in business, I have never met a more wise and incisive exit strategist than Tom McKaskill. Tom is the real deal.”
Philip T. Miner, CEO, The Miner Corporation, New Braunfels, Texas, USA
“Tom McKaskill has a profound understanding of entrepreneurial companies and what entrepreneurs need to do to maximise the value of their businesses on exit. I’ve used Tom’s principles on exits over many years to the great benefit of numerous clients. His book is a must read for entrepreneurs wanting to sell their business for the highest possible price.”
Geoff Green, Partner BSG Legal, Melbourne, Australia
“Tom McKaskill’s latest e-book, Ultimate Exits, is his best to date, providing a one stop shop for any business person or investor. Much of the earlier material is focused on business improvement and driving business growth. But then Tom turns to his forte, the theory and practice of driving valuable strategic exits. This should be essential reading for any CEO or investor, not just as a single read, but as a “bible” worthy of regular re-visits to ensure that the key messages are always top of mind.”
Ergad Gold, Momentum Funds Management Pty Ltd, Caulfield, Melbourne, Australia
“Tom McKaskill helped me build a strategy for my small sports travel agency which resulted in a staggering outcome. The business broker told me I would be lucky to receive 4x EBIT for my business, however, with Tom as my mentor I obtained 40x EBIT. Tom helped me see how a large corporation could maximise the value in my business and how I should prepare it for sale and engage the potential buyers. The end result is a testimony to the rare insights Tom has to value creation and exit strategy.”
Rob Cecconi, Executive Chairman and Founder, Sportsnet Holidays, Melbourne, Australia
“Ultimate Exits is a MUST OWN for any business owner, prospective buyer, stakeholder or anyone involved in the sale of a business. As a strategic planner for high growth businesses, a business owner and business broker who has been involved in hundreds of deals, I have never read a more comprehensive book on selling a business. I was blown away with Tom’s vision and brilliance. I have recommended the book to all my clients whether they were interested in selling in the future or not. There are at least 10 MUST DO things that I have asked my clients to implement which will be invaluable both in how they run their business and how they create value for the future. I sincerely believe that this is the best book I have ever seen on selling your business. The context is right-on and the organization makes it easy to read, follow and understand. An outstanding piece of work.”
Richard Russakoff, CEO Coach, Consultant/Speaker, Bottom Line Consultants, New York, NY, USA
“The key and critical distinguishing characteristic of Tom McKaskill’s books has been the transformation of an exit strategy which quite often is a passive affair for the seller and is frequently left to the whims of the potential buyers or business brokers, into a Proactive Exit Strategy. His new book offers the definitive systematic process for this proactive exit strategy that can dramatically revolutionize and transform passive exits based on sometimes subjective multiples, into proactive strategic exits through the creation of an objective, undisputable and sustainable platform for growth. This book is a must for the harvesting entrepreneur or a family firm that has reached a succession or an internal family conflict impasse…”
George S Vozikis Ph.D., Edward Reighard Chair of Management
Director-Institute for Family Business California State University, Fresno, CA, USA
“Tom’s book is a ‘must read’ for entrepreneurs wishing to maximize the proceeds from the sale of their business. Where the business has strategic value, a proactive sales strategy focused on acquirers with the largest opportunities and most urgent threats will extract the most value.”
Jim McElwain, Director, McElwain Consulting, Auckland, New Zealand
“In 2005 I attended Tom’s class on selling your business for a premium and also read his earlier edition of Ultimate Exits. The additional material in this latest version of Ultimate Exits has further strengthened Tom’s proven methodology for unlocking the value of your business. In less than a year after taking the course and reading the book I had sold my company, c360 Solutions, to a public company for roughly three times trailing twelve month revenues. Without positioning my business in terms of the value it could deliver to its new owner (as opposed to strictly the financial metrics) I might not have achieved as attractive an exit. The book and the course helped me to understand and properly position the value of my company as well as prepare the company so the due diligence and sales process were quick and easy. Ultimately, Tom’s methodology brought more value to both buyer and seller.”
John Gravely, Vice President, Marketing and Product Marketing, Scribe Software Bedford, NH, USA
“As an entrepreneur who has bought and sold businesses, I would definitely recommend this book to fellow entrepreneurs. This book contains many tips and pitfalls when selling your business and by just following a few simple but often forgotten steps will help you through the sale and will make you a great deal more money.”
David Southwick, Managing Director, David James Investments Pty Ltd, Melbourne, Australia
Dr. Tom McKaskill
Breakthrough Publications, 2010, (284 pages, 1.6MB)
Most acquisitions fail to achieve their objectives, or to return positive shareholder value. Companies enter into acquisition discussions with little preparation for evaluating the potential acquisition, or for managing the newly acquired business after the deal is done. Where there are major cultural differences, these are not adequately recognised during the initial discussions with the vendor and are often badly handled during the integration activity. However, with advance preparation these problems can be overcome. Successful acquirers carefully screen potential acquisitions to ensure that they fit with long term company strategy, proper due diligence is undertaken to assess their worth and adequate attention is given to the task of integration.
Entrepreneurs intent on growing their businesses through acquisitions need to develop capability and capacity in acquisitions management in order to successfully harvest the benefits of buying businesses. This book sets out to show entrepreneurs how they can become acquisition ready:
- Common reasons for acquisition failure and how to avoid them
- Various types of acquisitions and how they should be evaluated
- Differences between financial acquisitions and strategic acquisitions
- Cultural fit and how to assess and manage it
- How to manage international acquisitions
- How intervention and integration should be managed
- Various sources of finance for acquisitions
- How to structure the acquisition deal
- Role of professional advisors
- Guidelines for managing autonomous acquisitions
Ultimate Acquisitions sets out a systematic, comprehensive and pragmatic approach to growing the business through acquisitions and a process for identifying, evaluating, valuing and integrating financial and strategic acquisitions. Tom draws extensively on his own experience as a CPA, entrepreneur and academic, as well as his personal experience with acquisitions and the sale of his businesses. Tom combines his personal and professional knowledge with advice from successful entrepreneurs, business advisors and venture capitalists to create his unique Acquisition Strategy Index and the Operational Management Index.
In 13 crisp chapters Tom sets out his guide for Entrepreneurs.
Part A: Acquisition Strategies
- Building capacity and capability
- Failure rates are high
- Types of acquisitions?
- Developing an acquisition strategy
- Evaluating financial acquisitions
- Evaluation strategic acquisitions
- Cultural fit?
- Managing intervention and integration
- Financing the acquisition
- Finalising the deal
- International acquisitions
- Using advisors and professional services firms
- Meeting the challenge
Part B: Cultural and Ethical Assessment
- Identifying cultural and environmental differences?
- Identifying differences in ethical values
Part C: Acquisition Ready indices
- Operations Management?
- Acquisitions Strategy
“The ability to successfully source and execute Acquisitions will become a key capability of growth orientated companies in future. Tom’s book covers all of the major issues and provides a very practical methodology that will be extremely helpful for businesses about to undertake an Acquisition”
Michael Kerr, Director, Kerr Capital
“Young and growing industries sooner or later consolidate or merge – and that means you will either sell your business to an acquirer or become an acquirer yourself. This book will help you with both of those challenges, and in particular show you how to optimise your result – whichever option you choose. A sound acquisition.”
Adolph M Hanich, Senior Trustee, Telematics Fund
“The art of making the right purchase decision is often overlooked and frequently buried in just a set of formulas to calculate purchase prices and related issues. This book moves beyond that – and it will give entrepreneurs some very useful, original insights into how to optimize the acquisition process.”
Dr Michael Schaper, Former Head, School of Business, Bond University