Andy Denny, MD of Initium, talks to Liberti Club about how founders should prepare for the best exit and the role of fractional leaders in building value.
LC: What are the most common pitfalls you help sellers avoid?
AD: It’s important to understand the experience gap between buyers and sellers. Most buyers have completed multiple acquisitions, but it’s the first time for many founders. We help to bridge that gap. Good housekeeping and preparation is absolutely key, making sure you have all of the information you need in a format that is ‘diligence proof’.
Some unadvised sellers give away too much too soon. We control the information flow, so buyers receive the right information at the right time. Selling a business is technically challenging, and there are many variables. Things we need to be on top of that can delay transactions include complex structures that need tax clearance, regulatory approval, or changes to accounting policies, eg IFRS.
LC: How do you help founders build value for the best investment or exit?
AD: As a team, we have a huge amount of transaction experience and a genuine buyer’s perspective on the key performance indicators in given sectors. We know the red flags and we can help our clients to turn them green.
We specialise in creating a truly competitive environment with multiple buyers at the table, which creates choice, a range of offers, and helps deliver best outcomes. This means not just telling the story of where a business has been, but more importantly where it can go, presenting the future upside for buyers. Knowing your business is a different skill to selling it. Sometimes when we present data back to clients in ‘buyer-ready’ form, they don’t initially recognise themselves!
LC: How are fractional leaders helping your clients to build value?
AD: A key part of our Value Assessment service for ambitious entrepreneurs building towards an exit is an evaluation of their management team, planning around succession, go to market strategy and how they can grow EBITDA. Fractional solutions from a partner like Liberti help us to support the founder with an ecosystem of CFOs, CMOs, CROs or CPOs who provide the leadership capability to create value and build resilience. It also prepares a business for change as they adapt to different leaders leading transformation.
LC: Initium has a Fellows network of over 250 former clients. How does this enhance your service?
AD: Our Fellows have been there and done it and bring a different perspective: the emotional side of the journey. They love ‘giving back’ and sharing their first-hand experiences with other entrepreneurs considering exit.
LC: Initium is employee-owned. How does that differentiate you from other corporate finance advisory firms?
AD: Our industry is sometimes guilty of being transactional. But we’re all co-owners here, driven by our ‘people first’ values, and understand what business owners have been through to build the business in the first instance. We only act for sellers, and don’t rely on the private equity community for our workflow, so we can give truly impartial advice completely centred around the client’s best interest.