In his book Unlocking Your Company’s Value: The Keys to a Successful Business Exit, author, lawyer and financial advisor Les Nemethy says the best companies know how they will exit, and who their potential buyers are right from the day they start out. That might seem utopic, concedes Nemethy, who has been involved in the sale of hundreds of businesses, but an exit strategy can be much like a North Star for companies as it can guide them to build businesses that are attractive for lenders, investors and strategic partners. Inc. India caught up with him during his recent visit to India. If you’re looking to exit in any way, make sure you read ahead. 

What was your main objective behind writing this book? 
Most business owners have never exited a business before, nor have they had experience in managing a transaction. Most investors or buyers, however, have invested many times before. There is a fundamental gap in knowledge and experience between buyers and sellers of businesses in most situations. As in planning a mountain climb, a company owner should plan not only for reaching the summit, but also for descent (which can be at least as treacherous). The 30 real life case studies in the book, gathered from my experience of working in several economies in Asia, Europe and Africa, can be a useful insight and help train company owners who haven’t either articulated their exit strategies, or are looking to understand the best approach to take. 

Some of the most successful businesses I have seen are those where the founders know who the buyer of that business is going to be right at the beginning.
- Les Nemethy

When should company owners start thinking about their exit? 
I would argue that it’s never too early. The second question private equity investors possibly ask when they are looking to invest in a company, is what will be our exit? This often creates a culture clash because business owners are taken aback by the notion of exit. I would argue that business owners should also think a little bit more like private equity investors. Some of the most successful businesses I have seen are those where the founders know who the buyer of that business is going to be right at the beginning. If the owner doesn’t want to sell for a long, long time, that’s fine. We’re not suggesting he should. All we’re suggesting is that you start building with those principles in mind. Value will be optimised if a company is built with at least one eye on investor perception. 

Isn’t it utopian to prescribe this? In the hurly-burly of business, and the uncertainties that it brings, can founders really plan that far ahead?
You might say that the methodology is somewhat utopic. In fact, in the seminars I have spoken in Delhi and Mumbai, people expressed skepticism about planning an exit in industries that are ridden with overdue payments, government interference and regulatory chaos. People asked if they would be able to sell such companies. Of course, it would be so much tougher to sell companies such as these. So, yes you might say that it’s utopic to craft your business the way I’m suggesting. Many founders feel that way as well. Most of them are, in fact, very confident about not knowing what they don’t know. But, I’d urge that having an articulated exit plan can serve as their North Star guide—what would investors look for? Even if you don’t ever make it to the North Star, you can steer as close to it as possible. It’s somewhat like playing chess. When you sit down to first play the game, do you only learn the opening moves, and then go back to learn how to play the rest of the game? Or, do you learn the entire game, including the end, before you play? In business schools, they teach you how to start a business and grow it, but only once in a blue moon do they ever talk about successful exits.