November 2024 Newsletter
Reactive Management vs Proactive Management and Your Exit Strategy
- Management comes in different forms and methods, but you can categorize management into two approaches: Reactive Management and Proactive Management.
- Reactive Management
- Reactive Management can be necessary at times, but for the most part this approach deals with very expensive and time-consuming issues, which can also substantially decrease your profits and the value of your business.
- Reactive Management issues can include an abrupt resignation or death of an executive, a ransomware attack, the recent Covid pandemic, and needed changes due to a major economic recession.
- Proactive Management
- This type of risk management requires planning and focus in an attempt to pre-empt major issues. We will primarily focus on Proactive Management because you have far more control over issues that you plan for. The planning and execution involved in Proactive Management can yield tremendous results, increase sales and profits, and substantially increase the value of your business.
- CEO Advisor, Inc. focuses on all aspects of growth for its clients, and specializes in both buy-side and sell-side mergers and acquisitions services. The preparation work that we advise and work with clients on tremendously, a) Increases the value of our client’s businesses, and b) Dramatically increases the probability of getting a transaction completed.
- Proactive Management includes managing your business to optimize net profits and to prepare for and maximize the value of your company for a future sale. A great majority of your decisions as a CEO or business owner should be on increasing shareholder value. Whether focusing on sales, reducing costs and expenses, optimizing net profits, seeking an acquisition for accelerated growth, or the ultimate sale of your company, Proactive Management is critical to every company.
- Selling your company should never be a reactive situation, meaning you are at a big disadvantage if a single prospective buyer contacts you to buy your business. Selling your business should be a planned competitive sale process, whereby you proactively execute an exit strategy, you perform the proper planning and preparation to optimize your value.
- Conducting a competitive sale process to both targeted Strategic buyers and Private Equity firms is optimal, and you should start with your team of advisors, including an M&A advisor such as CEO Advisor, Inc. to manage and drive the entire sale process including due diligence, a corporate / transaction attorney to handle the legal agreements and a CPA or tax advisor for tax issues. The reactive sale will minimize your value and odds of completing a sale given only one buyer involved, and the proactive competitive sale process will maximize your purchase price and odds of completing a sale due to many prospective buyers competing for your company.
- Formulating an Exit Strategy is a key aspect of Proactive Management and is greatly needed in order to ensure, 1) You profit handsomely from the fruits of your years of hard work by successfully selling your business, or 2) Successful continuity of your business to execute on your plans, whether to sell now, sell in the future, pass your business on to your family, sell to your employees or sell due to a divorce or health issues, etc.
- To discuss your growth plans or your options for a successful Exit Strategy, contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information or to schedule a no cost initial consultation at your office.