How to Pitch an Exit Strategy
When Carolanne Doig came on Dragons’ Den with her business, she was already on her way out. Having built up Seaforth Rain Gear over the course of almost 15 years, she had done all the right things, but had yet to hit a homerun.
Her asking price was $100,000 for 40% of the business, which was bringing in about $200,000 in sales of protective rain gear. Her specialty product, a cover for golf bags, was being used by professional golfers – and not because she paid them to do so. The business had a solid product, or line of products, and yet there was something missing.
Arlene Dickinson spotted the missing piece – Carolanne had put her heart into the business for many years, and was done. She didn’t have the motivation to bring her business to the next level. Whether it was a matter of being bored, frustrated with a lack of progress, or just ready to move on to something else – the time had come for an exit.
Carolanne pitched her product well, and pitched her business well. She even noted what the flaw in her business was, that she needed to bring someone in to breath new life into the business. The offer she received reflected precisely that, and made a first for Dragons’ Den.
Arlene offered her $200,000 – for 100% of her business, with a royalty of 5% being paid over the next five years. The conditions were basically those which would involve putting into place a new management team – and Carolanne would have her exit. The offer was accepted on the show, making it the first time that someone sold their business by pitching on the Den.
Every business owner needs to know their exit strategy. Whether it will be to sell the business, merge, hire others to run it for you, there needs to be a way out. If opportunity presents itself to realize your exit strategy, then as long as you are aware of what that strategy is, you’ll be prepared to take advantage of that opportunity.