Preparing your private company for an exit: A board’s role

Private company board members have important questions to ask in fulfilling their strategic oversight duties related to when and how a future exit plan should be executed.

A newly published Grant Thornton LLP whitepaper  explores these issues in-depth. In the current environment, high inflation and rising interest rates are creating new challenges for private companies in their operations, but they also have the potential to affect merger and acquisition opportunities. With this in mind, one of the top objectives of a private company should be to enable long-term value creation that can lead to higher valuation.

With that in mind, in the current economic environment, boards can:

• View through an industry lens. Boards can direct management to focus on the macroeconomic trends that are specific to their industry to identify challenges and opportunities that can affect valuation.
• Focus on capital opportunities. It’s important to advise company leaders on how to continue getting access to capital as the investment landscape tightens.
• Strengthen the workforce. A board has key responsibilities in prioritizing human capital, which has emerged in recent years as an increasing differentiator in the value of companies.
• Remember tax impacts. Boards can check to confirm that management is keeping in mind the tax implications of all its strategies, including its exit strategy.

The turbulence of the past few years has resulted in an expansion of board members’ duties. These are likely to be heightened even more when a company is considering an exit. Thoughtful engagement and oversight at this time – and pursuing the right strategies – can lead to better valuation results and smoother processes that will benefit the company and its people.

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