Post Investment Support

A bus stop – but no bus

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I read an article this morning that got me thinking about exits – though that was not the intention of the article (http://benariltd.com/2017/10/a-happy-ending-when-the-bus-never-comes/)

It describes the situation outside a home caring for those with dementia. Sometimes the residents manage to get out – and a search will ensue.

An employee of the centre got thinking about how when residents escaped, they often managed to hop on a bus. This observation led to a solution. The Senior Centre built a fake bus stop right in front of their facility. A confused resident who manages to leave the centre sees it right away and sits down to wait for a bus. As they sit on the bench at the bus stop they relax and forget where they were going. Soon someone from the Senior Centre arrives and calmly asks if they’d like some tea, and takes them back into the centre and settles them back into their quit routine, thoughts of escape forgotten.

Got me wondering – how many of our companies are building fake bus stops to keep us investors happy, rather than real exits?

In the last few weeks I have seen two cases where it is clear the founders have become comfortable running their business, and have no intention of actively seeking an exit. At best they pay lip service to the concept, making the right noises if and when the investors bring it up.

Its the investors that have allowed this to happen, but not consistently and regularly, from the very first board meeting, measuring company performance against KPIs designed to build acquirer value.

If after making an investment you have ever wondered  “when should be start planning / talking about the exit?” you have probably already fallen into this trap.

The answer of course is – befor you make the investment, and consistently thereafter. Almost every board decision you are involved in – from who to hire and what customers to go after, should be considered against what will add the most value in the eyes of your exit partners.

Otherwise you might be sitting on that bench for a long, long time.