Preparing for an exit – whether public or private – requires more than strong financials. It demands a clear, credible story about business performance, told through the right key performance indicators (KPIs). For organizations looking to maximize value, developing and refining KPIs is not a last-minute task; it’s a strategic discipline that starts early and evolves with the business.
Define Outcomes Before Selecting KPIs
Successful KPI development starts by clarifying what matters most to the business and its stakeholders. Instead of tracking every possible metric, focus on those that directly reflect strategic outcomes. Ask: “If these goals are achieved, will customers and stakeholders view the company as successful?” This approach ensures KPIs are relevant and actionable, not just numbers on a dashboard.
- Identify the business’s most important goals.
- Align KPIs with these goals so they communicate value to potential buyers or investors.
- Evaluate which metrics your peer group shares with investors.
- Prioritize clarity and relevance over quantity.
Build KPIs With Accountability and Balance
Once outcomes are clear, translate them into measurable targets. Each KPI should have a single point of accountability, even if it reflects cross-team efforts. This builds trust and transparency qualities that both public investors and private buyers value.
- Assign ownership for every KPI to ensure follow-through.
- Balance leading indicators (predictive) with lagging indicators (results).
- Regularly review and refine KPIs as the business evolves.
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Start Early: Timeline for KPI Readiness
The best time to prepare KPIs for an exit is now. Organizations that operate with “exit-ready” data every day are better positioned to act quickly and confidently when opportunities arise. Waiting until a transaction is imminent can lead to rushed, incomplete, or inconsistent data, potentially eroding value or delaying the process.
- Begin KPI development as soon as exit is a consideration, ideally one to three years in advance.
- Maintain consistency in tracking and reporting to build a credible performance narrative.
- A strong data governance model ensures data remains accurate and consistent for reporting KPIs.
- Use periodic reviews to adapt KPIs as market conditions and business strategies shift.
Customize KPIs for Industry and Growth Stage
While standard financial metrics are essential, industry-specific and non-GAAP (generally accepted accounting principles) KPIs often provide a more accurate picture of value. For example, software companies may highlight customer retention or annual recurring revenue (ARR), while manufacturers might focus on operational efficiency.
- Identify which non-GAAP or industry-specific KPIs matter most for your sector.
- Ensure these metrics are calculated consistently and transparently.
- Stay informed about evolving regulatory expectations, especially as standards for KPI disclosure continue to develop.
Distinguish Between Public and Private Exit KPI Needs
Public and private exits share some KPI requirements, but there are key differences.
| Public exit (IPO) | Private exit (acquisition/PE) |
|---|---|
| – Emphasize transparency and regulatory compliance | – Focus on operational efficiency and growth |
| – Prioritize predictable, sustainable growth metrics | – Highlight cash flow and customer concentration |
| – Prepare for detailed, standardized disclosures | – Tailor KPIs to buyer’s investment thesis |
Public markets demand rigorous, standardized reporting and clear benchmarking against peers. Private buyers often seek more granular, operational KPIs that reveal near-term value-creation potential.
Take Action: Make KPI Development a Strategic Priority
Organizations that treat KPI development as an ongoing, strategic discipline, not a one-time project, are best positioned for a successful exit. Start early, focus on what matters, and build a culture of accountability around your metrics. The result is a compelling, credible story that resonates with buyers and investors, no matter the exit path.
Ready to take the next step in your exit-readiness journey? Contact CrossCountry Consulting today.