10 Key Value Drivers 10　Exit strategy and exit goals　中文

Main Idea

Successful entrepreneurs always have an exit strategy in mind right from the outset. This provides an end point by which success can be evaluated.

Supporting Ideas

If you don't have an exit strategy in mind, a potential investor may assume you're only interested in building and running a lifestyle business rather than a high-growth venture. That makes your proposal less attractive than one that offers a harvest once some event triggers the exit strategy.

The ten most likely exit strategies are:

1. Build the free cash flows—and then milk them to pro-vide excessive dividends rather than growing the company.
2. A private sale to the management team—through a leveraged management buyout or another similar transaction.
3. Sell the company to the employees—perhaps through an employee stock option plan or similar.
4. Sell the company to heirs or other family members.
5. Liquidation of assets—selling assets separately to generate an exceptional return.
6. Strategic sale—to a supplier, a key customer or a competitor.
7. Sale as a going concern—to a venture capital group or private equity group.
8. Enforced liquidation—allowing the owners to realize the added value created.
9. Be acquired by or merge with another entity—per-haps as part of an overseas company gaining a foothold in your markets.
10. Go public—by offering shares in an initial public offering and bringing in a professional management team.

If you begin your business with your end point in mind, exiting at an opportune time will unlock substantial liquidity for you and your investors. Detail in your business plan which exit strategy you plan on using, and set out the events that will trigger this.

Trigger events may include:

• Changes in government regulations.
• The appointment of professional managers.
• Core products reaching commodity status.
• The company reaching a preset valuation.
• The accomplishment of predetermined revenue targets.
• The securing of long-term contracts with marquee customers.
• Reaching a preset total head count.
• Members of the venture team reaching a certain age.
• The emergence of strong interest from potential purchasers.