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VENTURE INTO INVESTMENT PERFORMANCE

TIME TO EXIT

To exit or not?

We tried to find a quick definition of what is a business exit. Most of the sources agree on the following: ‘’A business exit is a method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past.’’

And for most of the time, the process behind a business exit is very much alike its definition: cold and unclear. Most entrepreneurs don’t bother to go through the hassle because it honestly sucks. It might work just fine, everything is done by the book and everybody sleeps better. Or it might not.

So, talking about sleep…not everybody cares ( it’s a rough cutt, but that’s the word) about the sleepless nights and the sacrifices you’ve made to build your business. It’s not just about the money and it gets frustrating. Because only you know the value of your business…but just can’t really quantify or explain it to everyone’s understanding. Or maybe you don’t know it! But for sure is more than what the buyers are willing to offer!!

So now, ‘’to exit? or not to exit?’’. It’s up to you. We don’t have the recipe of success and everybody who says it does…just doesn’t.

We would like to share with you our views on what are the precautionary measures and practices to help you avoid frustration, anger and loss of mind. You can find them listed below:

1. Research and analyze a few relevant exits from your industry.

This is a great starting point. Theory and inspirational videos are great but are far from reality. You really need to take a good look at actual successful exits. We’d also recommend you start the research with a company of similar size and find out how it all went out. Gather as much information as you need about the acquired companies to help your case, like public financial reports for the last 3-4 years – these should be available to the public for free, within a certain limit.

You should also take a look at not so successful exits. They can help you understand what to avoid 🙂 .

2. Keep an eye on potential buyers.

Make a list of investors, business angels, equity funds that could be interested in your business ( this goes both ways, think of who would you like to deal with).
Start by thinking WHY would they give you their attention. Also, for every type of buyer you must have a different approach, like in sales, based on information you gather about them (what are they looking for and why).

Last but absolutely not least, check the press. Websites, social-media accounts…you name it. Get as much data as possible.

3. Think of the relationship you’d like to have with the buyer.

A sale is based on a relationship, and people buy if they trust you. Do you feel the need to befriend someone before you close the deal? Or maybe you just want to get things done as quickly as possible. Would you like to work with someone that has a more philosophical point of view on the future or with a more pragmatic person?

Think of your ‘’terms of conditions’’ because they will be read, then choose a few potential buyers from your lists and connect with them. This gets us to our last point.

4. Connect with people

This is another good starting point. To be more specific, reach people of interest from organisations of interest. Use LinkedIn, follow them on their social-media accounts, wherever they are, try to be there too. You might get to know a little bit more about them. This can be of great value when negotiating with a venture capitalist about the exit strategy.

Track down every venture capitalist you find, business angel, CEO, business analyst etc.

So, let’s make a recap:

  •    start by researching the market or connect with people of interest (or both, no debate here )
  •    keep an eye on potential buyers and make a list of them
  •    define your terms & conditions

….and talk to people.

Go for it, only when you feel ready. But don’t wait too long and at least plan in advance. Some venture capitalists stated that every business should have an exit plan right from the beginning.
Is it far fetched? We don’t know.

We hope that the article helped you have an overvew of the exit process. Feel free to share it with your fellow entrepreneurs.

Sources of inspiration:

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