The Top 5 Leadership Qualities of CEOs Who Have Led Their Companies to Successful Exits
A successful exit is not an end. It’s a culmination of everything that your company has accomplished so far, and of all your skills as the CEO.
And while any CEO who’s built a business with exit potential probably has these five essential qualities, you’ll have mastered each of them as you navigate the complex visioning, planning, and execution required to achieve a BIG sale.
That’s the question a CEO needs to ask before making any major strategic plan. And a successful exit is an especially BIG moment for all stakeholders. The CEO has to see beyond dollar signs and game out the long and short-term effects of a sale on employees, C-suite execs, customers, shareholders, and even the CEO’s own legacy and future plans.
And, yes, driving up your company’s value to maximize potential liquidity is part of that equation. But what are you and the company going to gain besides cash?
Is the sale part of an M&A strategy that will create a BIGGER and better new company?
Will selling provide improved products and services to your most loyal customers, improve your brand, or enhance a potential buyer’s brand?
Will selling create new opportunities for your best employees to grow, advance in their own careers, or earn ownership?
And what about your role as CEO? Are you aiming to stay on, learn from new owners, and play to win against more formidable competition? Are you looking to cash out and start something new? Or, is a successful exit step one in your retirement plan?
There are no right or wrong answers to any of these questions. But you do need answers so that you can establish objectives. Otherwise, no matter how much money you make on a sale, you’ll end up leaving something on the table, to your detriment and the company’s.
2. Strategic thinking
Achieving almost all exit visions starts with putting your company in the best possible position for a sale. That means maintaining a laser focus on the KPIs that drive growth and minimize waste. Reevaluate your dashboards and scoreboards to make sure you’re tracking your most important numbers. Use your daily, weekly, monthly, and quarterly meeting rhythm to analyze progress toward key benchmarks and reinforce accountability.
And although you want to make your operations as lean — and profitable — as possible, don’t be afraid to make some investments in experimentation. When CEO Coaching International’s Don Schiavone was COO of Grasshopper, he encouraged the leadership team to imagine a company that could put them out of business. Grasshopper liked the company they dreamed up so much that they pivoted. That “new” Grasshopper eventually sold for $170 million.
While you’re optimizing your company, the CEO also has to investigate potential buyers. In addition to your C-suite and attorneys, consider working with an outside investment banker who could help you find a good match. Mention to a few of your CEO pals or your YPO forum that you’re thinking about an exit and suitors might come looking for you instead.
Getting to a successful exit requires making hundreds of small decisions along the way.
As you’re optimizing your operations, you’re going to find legacy products and services with unattractive profit margins.
You’ll sit down with long-time employees who are unwilling or unable to help you achieve your vision.
Your leadership team, your board, and your shareholders will present you with options and opinions that will challenge your core assumptions about your business and its true value.
If you’re running a high-value operation, you’ll meet with multiple potential buyers, each offering their own unique basket of incentives that could distract you from your core exit vision.
And as the long hours and stress pile up, you might have to redraw your personal and professional boundaries so that you have the physical and emotional resources you need to reach your dream exit.
Throughout the exit process, be open to every available data point. Give key stakeholders opportunities to have their voices heard. But once you have all the information you need to make a decision and act quickly. As a final check, run your choice by your core values and your ultimate vision. If this decision passes, then move on to the next one.
Any major change at a company makes employees nervous. But if employees feel like changes are happening behind closed doors, that’s when nervousness spreads into paranoia, fear, and outright distrust of management.
You will not be able to achieve a successful exit without the buy-in and best efforts of your best people. In the most open and transparent forum available to you, explain why you want to prep the business for a sale, your vision, your goals, the strategies you’re utilizing, and the KPIs that the company needs to align around. Establish responsibilities and expectations so everyone knows who needs to do what by when. Put systems in place for employees to provide feedback and for progress reviews.
Most importantly, tell a story around this exit that’s exciting, inspiring, and BIG. Help your people see themselves excelling in this new version of your company, building a great place to work, and creating a better life for their families. That kind of positive vision for the future is a narrative that customers and the next wave of talent will want to be a part of too.
5. Stakeholder management
It will be difficult, if not impossible, to give everyone in your company’s orbit what they want from an exit. The interests of employees who like the comforts of their current jobs might clash with the interests of shareholders who want the best possible ROI. Ambitious c-suite execs and team leaders might look at the company’s future org chart and see more competition for fewer promotions. A new owner might attract new customers while putting off established ones.
And as CEO, your post-exit plans might wind up conflicting with what’s best for the company and the people you’re about to leave behind.
High-EQ leadership has set great CEOs apart during these challenging recent years. Your ability to empathize with key stakeholders and face difficult choices from a variety of perspectives will determine if this exit creates enough wins to go around.
And your willingness to be honest about your own leadership skills, work on your deficiencies, and shore up blind spots, will be the difference between just closing a sale and Making BIG Happen.
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average EBITDA CAGR of 53.5% during their time as a client, more than three times the U.S. average, and a revenue CAGR of 26.2%, nearly twice the U.S. average.