This post is part of the My Zawya Story series.

Saffar sold Zawya to Thompson Reuters in 2012. I have been asked many times how we positioned such a sale and how early we planned for it. My answer to any private equity exit is: build a great company and the exit will come. Talk of IPO versus strategic sale versus financial sale is meaningless. If you build the company right then all those options will be available. Build it wrong and no options will be open.

What does it mean to build a great company? The most important element is free cash flow (‘FCF’). The ‘free’ in FCF is critical, as far too often FCF is a mirage driven by deferment of cash payments against accrued expenses. Increasing your cash by increasing your liabilities is not really an improvement of the company’s financial position. Sustainability is also important. Improving cash by negotiating better payment terms with suppliers, although a positive step, creates a one time improvement in the cash position. Finally FCF must be growing. If you don’t leave some growth on the table then finding an exit will become much more difficult.

Second on the priority list for greatness is robustness. This means that the company can face shocks and survive them. The first shock will be the exit as a change of shareholder is always going to be challenging. Robustness comes from removing the key man risk that is inherent in a start up company. Institutionalisation in the form of documented and applied processes and procedures. Complementing this is a company culture that guides the values and ethics of the company.

Finally, there is the brand. Zawya was relentless in building its brand. Being headquartered in Dubai helped as the plethora of conferences allowed Zawya to efficiently present itself in stands. Zawya also actively and strategically used its distribution channels to barter sponsorships. But most of all, Zawya delivered a great product. Nothing builds a brand as well as an invaluable product.

I truly hope you enjoyed this series and found some of what I have learnt useful.

Main series page: My Zawya Story.
Previous article in series: Global Financial Crisis.