Why Most Exits Fail

Hello Founders & Funders,

I want to officially welcome you to the Boardspire Letter — what I hope will become your #1 destination for information and news about scaling businesses and M&A advice.

Whether you’re looking to grow a business, exit one, or acquire one, I’m confident you’ll get a ton of value out of this letter in the months ahead.

You’re getting this letter because at some point in time you met me, talked with me, or our paths crossed in business.

But if you want to unsubscribe, you can always do that at the link at the bottom.

Let’s hop in…

Scaling to Exit is a Different Animal

One common challenge I’ve observed among business owners planning for an exit is that they often overlook scaling to exit in their pursuit of business growth.

 While it might seem that scaling a business to achieve higher revenues is always beneficial, the reality is more nuanced…

Particularly if your goal is to maximize valuation in preparation for a future exit.

 Take SaaS businesses for example.

If you’ve spent years aggressively pursuing new subscriptions at the expense of customer retention, you could face high churn rates…

And those churn rates might significantly lower your valuation at the time of exit, or even jeopardize the deal altogether.

In addition, if your business relies heavily on a single revenue stream, this concentration of risk can create a critical point of failure — making it much more challenging to exit at the valuation you want.

That’s why in the weeks and months ahead as we talk about how to scale your business… we’re also going to tie that in closely to how to scale for a future exit.

For those on the other side of the transaction, this perspective will also help you identify red flags and recognize situations where a better deal may be negotiated.

Ultimately, my goal is to help you navigate the complexities of mergers and acquisitions, whether you’re a founder, an investor, or a buyer, so that you can achieve the best possible financial outcomes.

Over the past couple years, I’ve published an article series I call “M&A from the Plane”.

It’s a column that shares insights from the many conversions I’ve had while flying hundreds of thousands of miles working on deals.

I’ll also be bringing some of those topics into this newsletter and diving a bit deeper into the topics and how they relate to scaling a business.

For example, over the next week I’m sharing what I call The 12 Horsemen of M&A Failure. Here are the first six:

• Value Destruction

• Unrealistic Expectations

• Lack of Communication

• Overpaying

• Poor Integration Process

• Company Misunderstanding

I’ll talk more about these topics in future issues of this newsletter, including what steps you can take to best avoid these issues.

I hope you’ll stay tuned and I look forward to sharing more with you.

David