Once you have assessed your company and planned your growth and exit strategies, you need to take steps to carry out that plan and get the company ready for an exit.

The final thing to do in executing your exit plan is to prepare a deck, alongside a three-year business plan.

A deck is a document you will give to the Private Equity (PE) firm, telling them what your company does. It doesn’t have to be long or minutely detailed – I recommend ten pages rather than fifty.

It should answer the questions: what does the company do? How has it been doing over the past three years? How do you think it is going to do over the next three years? It should also give a feel of the market.

Don’t present an in-depth market analysis, and certainly don’t spend thousands on a market report, because the PE firm is probably going to do all that anyway. With the best will in the world, they are not going to trust you on that. If the acquisition is big enough, they will commission a market analysis – this typically serves to reassure investors.

Your deck should also explain why you are selling, although this part can be left out if you aren’t planning to engage in an active selling process, ie if you decide to go under the radar and ‘unofficially’ let the market know that your company is up for sale in the hope that PE will come to you if they are interested in buying it.

I rarely recommend going under the radar because I see no reason to not be open about wanting to sell. If you have a strong personal relationship with your clients, you might be worried that they will leave if you announce publicly that you are in a sale process; the same could be true for your staff.

However, I would advise you have already told your staff. If you are close to your main clients, they should already know too; you might have said to them at some point, ‘I’m sixty, I’m starting to think about retiring...’

I also don’t believe, as some people do, that you will necessarily get a better price waiting for them to come to you than if you approach a particular PE firm or funds yourself.

You might get lucky and attract more than one interested party and start a bidding war; this is great news since you will have a back-up buyer in case the first PE messes you around. This can sometimes happen when you start an active selling process.

If you do decide to include your reason for selling in your deck, be honest. People like to know why other people do stuff. If you want to retire, say so. A reason many people try to hide is a simple desire for cash. Perhaps you have been running this company for forty years with only a semi-decent salary, working twenty hours a day, living in a modest house and driving a middle-of-the-road car; now you want a bigger house, a nice car, some expensive holidays... You need cash.

This is a perfectly valid reason to sell. In fact, it is usually the main reason, but many people don’t voice it. If you don’t give your reasons, your buyers are going to think, ‘Why is this guy selling? What is he not telling us?’ Put it in your deck.

Never lie in your deck. About anything. If you try to hide something, you can be sure that PE will find out. They are going to talk to your clients; they are going to see all your contracts, and they are better than you are at analysing numbers. If there is a weakness in your company, be upfront about it in your deck.

For example, ‘We made $2 million profit this year, but we won’t be getting this $500,000 next year because of X, Y and Z. However, this new client is going to spend $750,000, which will make up for it.’ Or, ‘These are my fifty current clients. I think these three clients are at risk next year because they are struggling/being acquired/the CEO is retiring, but...’

Above all, don’t lie about your numbers because during the due diligence process, the PE will be sitting on your lap and looking at all your day-to-day business. If you have said, ‘Oh yeah, I’m going to get this $50,000 next month, so I’ve counted it,’ you had better actually have it next month because they will be checking, and if you don’t, you will be screwed.

Give them the information; they will find it anyway. They will only trust you if you are honest with them.

This includes not only all your numbers and contracts but also anything remotely legal: every court case, every time your company has been sued, etc. When I presented my company’s VDD to my PE buyer, he said, ‘Where’s your legal folder?’ I said, ‘I don’t have one.’

Not because I had anything to hide or had simply forgotten, but because we had never been sued, not by a customer and not by an employee. They didn’t believe me. They dug around for two weeks trying to find something. There was nothing, but I should have said so in the deck.

When you are looking to create your deck for potential PE investment ensure you describe what your company does, consider including why you are looking to sell and most importantly, always be honest.

This is an adapted extract of ‘Cashing Out” by Alexis Sikorsky

An entrepreneur since the age of 15, Alexis Sikorsky started a software development company called New Access in Switzerland in the year 2000.

Twenty years later, he sold the company to a PE firm for a nine-figure sum and set up Alex Sikorsky Consulting Ltd, enabling SMEs to build their business and develop effective growth strategies leading to a PE exit. He has now distilled decades of insights into his new book Cashing Out to equip and empower entrepreneurs through the PE process.