Selling a (part of your) business through a pre-exit
A 100% sale is not the ideal scenario for everyone. Would you like to continue for a few more years, but in a different role? Maybe you see opportunities but need growth capital and a partner with certain knowledge and experience to achieve them? Do you want to cash out part of the company's value whilst remaining fully involved in your company's growth ambitions? Then the pre-exit is an interesting sale strategy to explore.
What is a pre-exit?
A pre-exit is essentially a preliminary step towards the full sale of your company. Typically, you will sell a part of your business to an investor. This allows you to cash out a portion of its value while remaining actively involved for several more years before eventually stepping back and selling the remaining shares. The pre-exit as a sales strategy is becoming increasingly popular. Marktlink has already assisted many entrepreneurs who have embarked on a whole new chapter with their company in this way.
How does a pre-exit work?
In a pre-exit, you sell all your shares to a newly established investment holding. Subsequently, you buy back an agreed majority or minority stake. In the following years, you work with the newly acquired investor on your growth ambitions and the reinforcement or professionalisation of your company. Ultimately, after 4 to 8 years, you will sell the company together and you too will benefit from the additional value created.
“In order to keep your business alive, to be future-proof, it is necessary to take steps. Letting go to move forward, but not saying goodbye yet.”- Jurrijn Laan, Creative Media Network
The benefits of a pre-exit
The pre-exit route offers several benefits for you and your business:
- A gradual process, allowing you and your staff the time to adjust to a new future.
- Financial peace of mind: for you, as you cash out a portion of your company's value, and for your business, through the injection of new growth capital.
- The opportunity to fully participate in fulfilling your ambitions for your company, but in a role of your choice – fewer management tasks, for example, and more focus on your passion for technology or sales.
- Bringing new knowledge and experience on board, such as in internationalisation or the use of AI.
- Working together with the new partner on the company's growth. You too will benefit from the resulting increase in enterprise value.
Selling to private equity
A pre-exit is often concluded with a financial investment company: 'private equity'. Private equity funds are keen to invest in businesses with actual growth potential. These funds often invest not only capital but also knowledge, experience, and networks, and are eager to work with you to bring a company to the next phase within 4 to 8 years. The funds differ in their level of involvement, approach, focus on certain sectors, and experience with specific issues – so it is crucial to find the right match for your situation. In more than half of our transactions, private equity is involved. Marktlink has a broad investment network of over 200 funds throughout Europe. We understand the focus and working methods of these funds well. The result? You close the deal of your life well-prepared and with a stronger negotiating position. |
Do you want to know more about pre-exit? Feel free to contact us and our experts are happy to help you.