In a webinar hosted by Creamer Media Webinars on behalf of professional sell-side mergers and acquisitions advisory Deal Leaders International (DLI), business owners and attendees gathered to explore the vital, often challenging, topic of planning for a successful exit strategy. Set against the backdrop of the US presidential election and shifting global markets, moderator Michael Avery, a well-known financial journalist and broadcaster, underscored that while political headlines captivate attention, business leaders need to focus on "the art of the exit."

For entrepreneurs contemplating their next steps, the discussion offered insights into planning ahead, maximising value and ensuring a seamless transition.

Avery referred to "the age of the deal maker" to describe the transactional climate of recent global leadership. With economic anxiety apparent in the US, 10-year bond yields rose above 4.4%, while the approaching G20 presidency of South Africa in 2025, as well as other local and global developments, have all impacted strategic planning.

For South African businesses, Avery suggested this pivotal moment could present opportunities for growth and new partnerships.

Providing perspective, DLI mid-market division CEO Rick Grantham, a mechanical engineer turned business adviser, drew on his experience of founding, growing and selling his own businesses. His recent work includes the sale of a foundry on South Africa’s East Rand to a Chilean company, illustrating the importance of finding the right buyer—even internationally—when the local market presents challenges.

Grantham’s engineering background has proved invaluable, offering a deep understanding of industry intricacies, which he uses to guide others through complex transactions.

DLI corporate advisory CEO Andrew Bahlmann, a chartered accountant with a background in corporate banking, shared insights on the personal side of business exits.

For him, successful mergers and acquisitions (M&A) transcend numbers and processes; “they’re about trust,” he stated.

Bahlmann emphasised aligning with partners who respect the legacy that entrepreneurs have built over the years. With recent deals in technology and electrical distribution, he hinted at significant upcoming transactions, underscoring the role of shared values in high-value deals.

Focus, Transparency and Market Readiness

Grantham highlighted that, while growth is essential, focus is equally crucial.

“Businesses that are overly diversified often struggle to appeal to potential buyers,” he said.

Grantham explained that clarity in a company’s focus and structure enhances market readiness and value. Additionally, he noted the importance of a well-developed marketing strategy and a structured sales pipeline, suggesting that relying solely on word-of-mouth can undermine a business's perceived stability.

A major pitfall, he observed, is the tendency for owners to take money out of the business as a tax-saving measure. He argued that reinvesting profits—especially in areas like marketing—strengthens the business’s valuation, emphasising that sustainable growth should focus on profit bolstering through internal improvements.

Bahlmann expanded on these points, stressing that strategic positioning is essential to enhancing both valuation and appeal. He noted that as entrepreneurs enter exit planning, they often identify additional value that might prompt them to remain invested longer.

“A thoughtful approach to market positioning,” he said, “requires understanding both the financial and qualitative aspects that potential buyers value.”

Real-World Strategies

An example of strategic positioning shared during the discussion was Absolute Pets, a pet store chain strategically located near Woolworths stores, ultimately acquired by Woolworths. This case demonstrated that aligning a business strategy with potential exit goals—not just growth—can create a favourable path toward a smooth and profitable sale.

The conversation emphasised that M&A is "high-touch", meaning that while technology streamlines certain processes, the human element remains paramount. Grantham and Bahlmann’s experiences highlight the role of chemistry and shared vision between owners and advisers, underscoring the importance of trust in each step of the exit process.

Further, Grantham identified the aspects that can help owners identify the best potential buyers.

“When considering potential buyers, business owners should look for those who would find greater value in the business than they currently do, often due to synergies like geographic expansion opportunities or complementary offerings. Ideal buyers are also those who sell non-competing products to the same client base, as this allows them to leverage shared access to customers without direct competition. Additionally, understanding the shareholders behind potential buyers can provide crucial insights; in private equity, for example, knowing the shareholders' strategic goals can help identify companies that prioritise acquisition-driven growth and are likely to focus on long-term value creation,” he noted.

Meanwhile, Bahlmann cautioned that many business owners underestimate the toll of due diligence. He advised ensuring all necessary information is readily accessible, allowing owners to maintain momentum and avoid deal fatigue.

“By preparing thoroughly, business owners can mitigate setbacks and streamline the decision-making process,” he advised.

Grantham further highlighted the importance of transparency through marketing materials and an organised data room. “Financials alone don’t sell a business,” he added, advocating for a well-packaged narrative that conveys a compelling story beyond numbers. Grantham’s approach involves data-driven marketing, helping to reassure buyers and build confidence in the transaction.

As unpredictable market forces reshape the global landscape, thoughtful planning and strong advisory partnerships are crucial for a successful exit. The webinar discussion underscored that a well-thought-out exit strategy is as essential as a growth strategy. For business owners ready to plan their next chapter, meticulous preparation, strategic focus and trusted relationships can pave the way to a smoother, more profitable, exit, the speakers concluded.