Case Study: Exit Strategy The Background: As a result of steadily declining revenues and margins in the last five years, this once financially strong business has seen a reduction in profitability. The second generation owner of this 40-year-old manufacturer of agricultural products was originally seeking strategies to turnaround his business. However, upon analysis derived from the processes of the Legacy Enterprise Support Program, an exit strategy proved to be the better alternative. The Issue/Challenge: The initial investigation and analysis confirmed the fact that the company’s current trend of declining value had to be dealt with immediately. “Stopping the bleeding” became the first critical step towards buying the time to further analyze and evaluate strategies that would maximize the dollar value of the business at the time of sale. How Legacy Helped: Under the Enterprise Support Program, a series of weekly client meetings were used to gain a greater understanding of “how” the company worked and “why” certain business practices were in place. During these weekly sessions the owner and the Legacy Advisor developed a mutual trust that enabled them to more effectively brain-storm, discuss, implement, and execute necessary changes. Based on these weekly discussions, we developed optional exit strategies. These optional strategies included selling the existing business, creating a strategic alliance, or liquidating the business by selling off the individual assets. These optional strategies took into consideration the owner’s personal desires, his personal financial position, and his preferred timing. The first exit strategy, selling the existing business, is often the most obvious exit strategy considered. However, since Legacy Associates performed a formal business valuation analysis to determine the business’s sale value, this exit strategy was not the best option. Due to poor financial performance, the business lacked sale value. Plus, the owner’s personal financial position dictated the need for a greater sale price. The second exit strategy, creating a strategic alliance, initially appeared to be a strong option due to the local market conditions of a slinking customer base and high transportation costs. A comprehensive market/competitive analysis was performed to determine the most likely strategic partners, followed by a series of face-to-face meetings with each prospective strategic partner to determine the most viable and interested candidate. Ultimately, this option proved to be unacceptable to the owner due to the fact that it required him to remain active in the business for a number of years. The third exit strategy, selling off parts of the business, initially looked like a “long shot” because of the coordination of various players required to make this strategy economically possible. The process involved a series of meetings with local officials not only to determine the municipality’s interest in acquiring the property for their use, but also, to determine the likelihood of the city approving any property rezoning. This process proved to be very beneficial because the news of the city’s interest in acquiring the property perked the interest of a local developer. This initial interest from developer resulted in the submission of a formal offer to purchase the property and the acceptance of the offer by the business owner. The Results: Through a structured process of in-depth analysis, evaluation, and the execution of a solid strategic plan the business owner was able to realized a premium price by selling off individual pieces of the business versus the actual business value determined by the business valuation.