Combining Progressive-Exit with Buy-Build Strategy
A progressive-exit transaction (PET) strategy is a business growth approach that involves preparing a company for a future acquisition or initial public offering (IPO). A PET strategy typically involves optimising a company's financials, operations, and market position to make it more attractive to potential buyers or investors. On the other hand, a buy-build transaction (BBT) strategy focuses on acquiring other companies or building new business lines to expand a company's product offerings and customer base.
Combining a PET strategy with a BBT strategy can be an attractive approach for founders and executive teams of tech-companies and tech-enabled service companies for several reasons:
Enhancing growth potential: By combining a PET strategy with a BBT strategy, companies can accelerate their growth trajectory and increase their potential valuation. Acquiring other companies or building new business lines can help diversify a company's revenue streams and expand its market reach, making it more attractive to potential buyers or investors.
Achieving operational efficiencies: Through acquisitions or new business lines, companies can realise operational synergies that lead to cost savings and improved efficiency. This can increase a company's profitability and make it more attractive to potential buyers or investors.
Mitigating risk: By diversifying their product offerings and customer base, companies can reduce risk exposure and become more resilient to market changes. This can help to increase the likelihood of a successful exit, whether through acquisition or IPO.
Attracting top talent: Building a carrier for growth through PET and BBT strategies can create a dynamic and attractive company culture that not only attracts top talent but also fuels innovation. This can help to further drive innovation and growth within the company.
Overall, the combined PET and BBT strategy is a robust approach for tech-companies and tech-enabled service companies looking to build a carrier for growth. By diversifying their revenue streams, optimising operations, and mitigating risk, these companies can increase their potential valuation and become more attractive to potential buyers or investors.
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