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by Andrew Lam-Po-Tang
I have been thinking about 'exit strategies' for design business owners lately, because it is an issue that is gaining visibility in many discussions with older designers, and /or designers who have fully or partly sold their businesses to outside investors.
What is interesting about this topic is that when you are well-prepared for a clean exit, it actually doesn't matter if you exit at that point. What matters is that the business no longer relies on you being around to keep it all together. Which puts you in the enviable position of being able to redefine your involvement and, as many aspire to do, refocus on the 'fun stuff' of designing again.
Below is then a little thought exercise that I have done. It tries to define a 'perfect' exit by describing the set of conditions around that exit. The purpose of this exercise is to identify what things should be worked on in preparation of an exit. Below each condition description I have bulleted what that condition implies for the underlying business.
Clearly, there are many, many factors to be dealt with in an exit situation, but I have found that focusing first on the short list of the most critical issues is a great way to organise your thinking.
Let me know what you think.
A 'perfect' exit from your business is when:
Everyone is sad to see you go, but most people believe that the business is in solid shape and will succeed on its own terms.
next generation of leadership and appropriately evolved operating principles are in place and highly visible to staff, clients and suppliers
Most of your key people are grateful for the foundation you built but also excited about the transition to greater independence. And for the few key people who aren't so excited - they are at least prepared to give it a go.
clear and agreed expectations (and appropriate rewards) for the key staff required to keep the business going
You made good money that you are proud of for the right reasons.
the business value is driven by sound fundamentals rather than stupid buying or clever negotiation (and therefore the new owners are not in for any nasty surprises)
The new owners have a clear view of how they are going to get a good return on their invesment.
a realistic business growth path
You know that the studio will continue to win peer recognition and awards for great, innovative work.
a growth path that maintains the principle of achieving both design quality AND commercial success, rather than trading off one for the other
Return to Observations
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The views expressed this article are not necessarily those of AGDA. Please note that the information in this article is the opinion of the author only. I can therefore accept no responsibility for actions taken on the basis of this information. Copyright Andrew Lam-Po-Tang (andrew@lam-po-tang com), 1998-2008. Permission is granted to freely copy this document in electronic form, or to print, for personal use. Reprinting for non-personal use will require the express permission of the author (which I will generally be very happy to give).
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