|
Documenting The Exit Strategy In Your Business Plan
All investors greatly desire and are motivated by a clear picture of a company’s exit strategy, or the timing and method through which they can “cash in” on their investment. This picture best comes into focus when the key valuation and liquidity drivers of the company are clearly delineated. An excellent method to accomplish this is through descriptions of comparable firms that have had successful liquidity events, either through acquisition, merger, of initial public offerings (IPOs).
It is helpful to show other companies in your market, or similar companies in other markets, who have successfully exited, and how and why these companies were successful. For instance, were they successful since they acquired a large customer base? Or were they successful since they accomplished fast growth or high profit margins? It is also important to tie their success to their exit price. Was the exit price based on earnings or the number of customers the firm had at the time? The business plan should tie these metrics (e.g., exit price of $X per customer) to the business to determine its future price.
The most common exit strategies in business plans are IPOs or acquisitions. While the method of exit is not always crucial, the investor often wants to see the decision to better understand the management team’s motivation and commitment to building long-term value. If acquisition is the selected exit path, then the business plan should detail potential companies that might want to acquire the firm in the future and why. Likewise, if an IPO is expected in the future, the business plan should document the financial metrics of the company that make it ripe for this type of exit.
In most cases, investors only make money when the business reaches a successful exit event. As such, it is critical that business plans explain the expected exit, detail why this exit was chosen and validate a realistic exit price.
About the Author: Growthink Business Plans has developed over 200 business plans for clients that have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. For more information go to http://www.growthink.com and/or visit its sister site at http://www.gtsecurities.net.
Source: www.isnare.com
Finally! Find Out Why Some People Always Succeed
"Who Else Wants To Stop Living A So-So Life Where Nothing
Seems To Change?"
Live A Life You Can Be Proud Of,
Step By Step, And One Goal At A Time!
Click here to start now
DO YOU HAVE A SELF HELP SITE?
Want to trade links? Learn more - click here
See our list of recommended resources - click here
|
Stay Updated!
Be the first to know when I add a helpful resource to this site. Join our "Self Help Updates" mailing list
Please type your name and email address into the box below and click on the "JOIN" button.
We HATE spam. Your details will be kept strictly private and never shared with anyone. You may cancel your subscription at any time.
|
|
|
Home
News
Articles
Links
Material on this site is provided for information purposes only. It is not meant to be a substitute for professional advice. The information should not be used to diagnose or treat a health problem or disease, make investment and financial decisions, or to prescribe any medication. In case of doubt, promptly contact a qualified professional for advice.
Copyright © 1997-2006, All rights reserved. Privacy policy.
Text, graphics, and HTML code are protected by US and International Copyright Laws,
and may not be copied, reprinted, published, translated, hosted, or otherwise
distributed by any means without explicit permission. Legal notices
Guydz.com (TM)
2/28, O'Shanecky Street, VIC 3062
Fax : (612)-903 2671 E-mail : webmaster @ guydz.com
URL : http://www.Guydz.com/
|
|
