Exits without tears

Book review of The Art of a Happy Exit: How Smart Entrepreneurs Sell Their Businesses

Is there ever such a thing as a happy exit, or an amicable separation? If adages hold semblances of truth then absence only makes the heart grow fonder even if it is linked to memories that are derived from possession and control. At least, that’s one school of thought when it comes to mergers and acquisitions and situations when corporations buy or get bought by other companies. 

Navigating this transition with minimal turbulence, maximum effici­ency and precision is part art, part science and sometimes only possible with a little dollop of luck and long-term prep­aration, argues the author, who has also been an entrepreneur, mentor, and angel investor.

In fact, he’s candid enough to suggest that he doesn’t have a magic formula or silver bullet to make every exit happy or perfect. What he can share through his exp­eriences and studies over the years are frameworks and operating guidelines that could support entrepreneurs and CEOs in their quest to find their true north. 

The learnings that Mr Srikrishna shares aren’t only from his own insights but extend to a dozen or so entrepreneurs between America and India that he has encountered and studied.  If building a business is a journey that resembles the famous poem by Constantin Cavafy, which talks about ports and harbours offering enriching lifestyle-rich experiences, then selling that very business is exactly the same. Ask yourself, he writes, would the business fall apart if you took a two-week vacation now without phone or email? Or a two- or three-month break? Alternately, would you fall apart if you took such a break?

The narrative is simple and to the point, written in the manner you’d expect of most management professors using illustrations flowcharts, punch quotes and one-liners but don’t expect memorable detailed granularity. Yet, insights can be found and useful trivia abounds. For example, Mr Srikrishna notes that exits and sales are best avoided when founders or owners die. That’s because the data indicates that the death of a founding entrepreneur wipes out on average some 60 per cent of a firm’s sales and slashes jobs almost 17 per cent. Not the best terms for getting an optimum valuation, in other words. 

The Art of a Happy Exit: How Smart Entrepreneurs Sell Their Businesses

Author: K Srikrishna

Publisher: Harper Business

Price: Rs 499; Pages: 296

 

The author draws from his own experience in selling a company and recounts how he performed an exercise that involved getting his team to huddle down and raise their queries and conc­erns. He writes that they were able to drill down to the core issues within an hour not because they were an evolved set of people but that it was part of the company's culture to communicate with internal stakeholders. 

The resolution and agreement that his team was able to stitch together was a result of continuously commun­icating, both collectively on a quarterly basis and in smaller groups at greater frequency as well, much before selling the business. Preparation and good techni­ques helped meetings be productive, but it was open and honest communication that won the day, he writes. 

Useful is an exercise on finding purpose that Mr Srikrishna deploys late in the book. It circles around what you would do if you had a billion dollars, limited time to live and zooms in on what you do when you get up in the morning. Cliched as this may seem on the surface, answering those questions is certain to enhance clarity of decision choice.  

There are some incongruities for which publishers have simply got to start taking responsibility when it comes to business books which by definition are held to task on accuracy and detail. In an earlier chapter the book refers to how in the past a million dollars was sufficient for retirement and equates it to a crore of rupees. The current exchange rate to a million dollars is more than Rs 7 crore. 

Despite such minor blips the book has interesting anecdotes. Chapter 12 offers an interesting perspective. It is the recollections of the entrepreneur who sold the family pizza business to corporate fast food giant McDonald’s. 

Think that the best route to an exit is doing it all yourself? The truth, writes Mr Srikrishna, is anything but. He suggests that roping in intermediaries for the sale though it may reduce the overall price is a better option to exercise. "The truth is the value the right intermediary brings—both financially and otherwise—far exceeds the fees you pay them. In other words, if they are any good, not only do they earn their keep, but you’re likely to end up with a better deal than you’d have otherwise. " 

Ultimately, it is every business person's default condition to be in an animated state of aspiration, hankering for growth and looking for better results, higher profits, larger turnover, and so on. The exit may be an art but happiness ultimately hearkens back to an individual definition of how one sees and interprets the word. That journey can be made smoother with frameworks, smart to-do lists and guidelines. Or as someone famously said, even mediocrity with a plan seems to stand taller than greatness with no direction.