In the world of growing eCommerce brands, one of the most important, yet often overlooked, strategies is planning for a potential exit. Whether through acquisition or public offering, an exit can provide the final step in a company’s evolution. But, it’s not just about cashing out—it’s about building a brand that appeals to future buyers.
On a recent episode of eCommerce on Tap, we explored the potential exit strategy of Shinola, a brand that has successfully navigated growth, challenges, and even leadership changes. Shinola’s story offers critical lessons for brands seeking to position themselves for a profitable future.
1. Understanding Exit Potential
The right exit strategy can significantly impact your brand’s value. Brands often don’t realize how the steps they take early on will shape the options available when it’s time to exit. Shinola, for instance, positioned itself to be an attractive acquisition target by building a unique, recognizable brand identity. By integrating American manufacturing and creating a premium, local craft feel, Shinola made itself appealing to larger buyers like luxury goods conglomerates.
Exit strategies are varied:
- Acquisitions: A larger company purchases your brand for its assets, market share, or intellectual property.
- Mergers: A combination with another company can create synergies, opening new doors for growth.
- Initial Public Offerings (IPOs): Going public allows a company to expand and raise funds but involves scrutiny and public visibility.
Understanding which exit strategy aligns best with your brand vision is crucial. However, the groundwork starts much earlier in the brand-building process.
2. How to Position Your Brand for Exit
A key takeaway from Shinola’s success is that they didn’t just build a business—they built a story. Crafting a narrative around your brand and its values can make it more attractive to potential buyers. Shinola’s Detroit roots and commitment to creating jobs in a distressed city gave it an emotional resonance with consumers—and now, potential acquirers. This authenticity and community connection played a significant role in its overall success.
Here are a few ways to position your brand for an eventual exit:
- Focus on Brand Value: Build a story, a unique offering, and a loyal customer base.
- Optimize Operations: Streamline your processes, from sourcing to customer service, and ensure that the business is scalable.
- Grow Your Revenue: Investors and acquirers look for growth. Focus on sustainable financial growth and revenue diversification.
- Prepare for Due Diligence: Keep records in order, show transparency, and demonstrate how your business is primed for expansion.
3. Leveraging Vertical Integration for Exit Value
A brand like Shinola, which has taken steps toward vertical integration, is also positioning itself for a higher valuation. By controlling parts of the manufacturing process—like watch and leather goods production in Detroit—the brand ensured quality control, faster time-to-market, and greater control over costs. This strategy gives acquirers confidence in Shinola’s long-term viability and operational expertise.
Vertical integration can increase a brand’s control over supply chains, boost profit margins, and protect against market disruptions. For many acquirers, these factors significantly enhance the brand’s attractiveness.
4. The Role of Leadership Changes in Exit Strategy
Leadership transitions can also impact the exit process. Shinola’s journey saw key leadership changes over the years, but their core mission and brand identity remained intact. Whether through internal promotions or external hires, it’s important to have a leadership team that shares the vision for the brand’s future and knows how to manage the company during the transition.
Brands preparing for an exit should ensure they have strong leadership in place. Buyers want to know that the brand can continue to grow even after the current leadership steps away.
Conclusion
An effective exit strategy doesn’t happen overnight—it’s the result of consistent, intentional actions that build a brand’s value and appeal. By focusing on operational efficiency, brand storytelling, and vertical integration, you can position your brand for a lucrative exit.
At Izba, we specialize in helping businesses optimize their supply chain and operations, creating value that makes an eventual exit much more appealing. If you’re looking to build a brand that’s primed for growth or exit, we’re here to help you get there.
