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Preparing for Change: Strategic Preparation for Growth and Exit

Preparing for Change: Strategic Preparation for Growth and Exit

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A $250MM, high-growth, PE-backed SaaS & payments company was preparing for its next stage of growth and evaluating multiple exit strategies for its then-current sponsor. As part of its evaluation of strategic alternatives, management and the sponsor sought FD’s expertise to guide them through understanding and executing the IPO preparation process as part of a dual-track strategy. The goal was to ensure they were appropriately positioned for multiple funding and exit options, positioning the company for success regardless of the outcome.

FD’s Approach: Laying the Groundwork for Multiple Outcomes

Preparation

FD began by conducting multiple sessions to review the various requirements the company would have met to be “IPO-ready” and their maturity relative to those requirements. Beyond our technical and process expertise, we brought professionals who had successfully led IPO preparations and dual-track processes from the CAO and CFO perspectives. Equally important was our ability to translate complex concepts into clear, actionable steps that were easily understood across the organization.

Resource Planning & Cost Estimation

Targeting an estimated IPO date, we developed a comprehensive gap analysis and presented senior management with action plans, cost estimates and timelines to complete the readiness activities, considering the need for optionality with other exit strategies. This included determining which teams and individuals could take ownership of different workstreams, given other operational commitments and skill needs, and identifying the key milestones along the way.

Building Consensus

FD partnered closely with management to educate both the sponsor and broader leadership team on the scope, timing and cost of the IPO readiness efforts. We emphasized the rationale behind taking certain actions early in the process versus deferring them, helping stakeholders understand the ‘why’ behind each recommendation. Management valued having a partner who had served as both an advisor and an operator, someone who could strategically guide these conversations with the insight of firsthand experience.

Project Management & Tactical Execution

FD assisted the CFO organization by leading project management and driving execution on many of the workstreams. Management valued our ability to provide both strategic guidance and hands-on support, leveraging the full breadth of the firm’s expertise and resources to advance the preparation process. Key areas of preparation assistance included:

  • Coordination with lawyers, bankers and external accountants
  • Technical accounting analysis
  • Business combination valuations
  • Initial SOX readiness assessment and material weakness remediation
  • Outsourced tax accounting
  • Evaluation of SEC requirements related to financial statements and initial S-1 drafting assistance
  • Building a data book of financial and non-financial information to support various documents produced in the process

FD’s real-world experience and hands-on approach ensured that the company could make significant progress while still managing regular business operations.

Outcome and Best Practices

Although the company ultimately chose a recapitalization with a new group of investors rather than an IPO, this case study provided valuable lessons to inform any process:

Preparing for Multiple Outcomes: As this experience demonstrated, organizations should never plan for just one outcome, particularly when it comes to exit or funding events. Being prepared for different scenarios ensures that a company can adapt quickly, even when plans change unexpectedly. Achieving alignment between the board and management team is key in the process.

Start Early: Not being ready can cause an organization to miss an IPO or investment window; preparing last minute can also lead to increased costs and strain on organization resources.  Starting early provides for optimal outcomes and allows for optionality in the process to reduce costs and resource needs

Deep Involvement Drives Success: FD’s role as a project manager and tactical executor allowed the company to focus on their core operations while still progressing toward their larger strategic goals. This hands-on involvement played a crucial role in the company’s ability to adapt to their changing strategy.

A Foundation for Future Growth

The strategic groundwork laid through FD’s guidance positioned the company for long-term success, regardless of the chosen path. While they ultimately pursued capitalization instead of an IPO, the preparation process strengthened their financial infrastructure, enhanced internal processes and provided clarity on key metrics. These efforts will continue to support future funding opportunities and business growth, ensuring they remain well-positioned for any strategic moves ahead.

Looking to prepare your business for growth, funding or an exit event?

Get in touch with us to explore how our team can support your organization through every step of the process.

Contributors

James Douglas, Partner, Frazier & Deeter Advisory, LLC

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