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.
As President of Growthink Business Plans, Dave Lavinsky has helped the company become one of the premier business plan development firms. Since its inception, Growthink has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share.
Does your overall business strategy include the recruitment of college... Read More
I am not a big fisherman, but I do enjoy... Read More
You have heard that there is extra money on the... Read More
Imagine an office without a desk, or lights, a computer,... Read More
Whether you are seeking capital for your company or are... Read More
Growth through acquisition should not be considered an option reserved... Read More
After 128 years of business, a household word, Montgomery Wards,... Read More
David E. Gumpert, author of Burn Your Business Plan, often... Read More
As a franchisor it is imperative that you seek, find... Read More
When you start your program to purchase your "ideal" company,... Read More
Many companies are reluctant to dive into outsourcing ocean because... Read More
Every decade we seem to come up with a buzz-word... Read More
When someone mentions business planning we have been conditioned to... Read More
Some analysts credit [Larry] Ellison with anticipating the consolidation in... Read More
What do Mark Victor Hansen, Robert Allen, Anthony Robbins, Andrew... Read More
The day you decide to take the plunge and work... Read More
Writing a Business Plan these days is tough, venture capitalists... Read More
Every business experiences slower periods. For some, they sell more... Read More
With a heightened awareness of opportunity, ideas can often be... Read More
If you are in the parking business and own or... Read More
One Research Scientist at the Hewlett-Packard (HP) Imaging Systems laboratory... Read More
I am surprised how few sales professionals, independent consultants, and... Read More
Why cut costs now? Efforts are multiplying to cut costs... Read More
Writing a business plan to help you direct and manage... Read More
If you own a mobile franchise business and wish to... Read More
If you've ever listened to Warren Buffett talk about investing,... Read More
Business rises and falls on leadership. According to business guru,... Read More
Ask a small business owner about their strategic plan and... Read More
Is there really anything as a problem? Does chaos or... Read More
Remember reading "Alice in Wonderland?"She asks the Cheshire Cat, "which... Read More
No "meme" isn't a typo and Got Milk, the more... Read More
As a business owner, you've likely created a hurricane plan... Read More
When in doubt, cut that out! Yeah, yea, doubting Thomas... Read More
One of the key challenges for any business is to... Read More
Microsoft Great Plains fits multiple services market niche and healthcare... Read More
One of the quintessential parts to any business is your... Read More
When developing the competition section of your business plan, companies... Read More
Canada's lean leaders need to look beyond the horizon and... Read More
I. INTRODUCTIONThe term resilience, which is of frequent use in... Read More
1. Attempt Succession Planning Without Other Strategic Plans. Succession plans... Read More
Writing a business plan for a franchised outlet of a... Read More
All investors greatly desire and are motivated by a clear... Read More
No "meme" isn't a typo and Got Milk, the more... Read More
"Begin with the end in mind," says Stephen Covey in... Read More
GETTING STARTED WITH SUCCESSION PLANNING: PART IA survey of 4,300... Read More
( * - the word 'product' can be substituted to... Read More
Strategic planning and consulting is the strategy roadmap to manage... Read More
Want to become more strategic? Add these traits to your... Read More
Writing a business plan to help you direct and manage... Read More
The boom of the dot-com era in 1999 brought the... Read More
No matter what product or service you provide you will... Read More
Storytelling and writing a business plan actually go hand in... Read More
There's nothing automatic about corporate growth, particularly in the information... Read More
When you start your program to purchase your "ideal" company,... Read More
Human beings are rational agents. Rationality endorses one to take... Read More
Six Sigma is becoming a proven approach for businesses and... Read More
Richard L. Daft one of the country's recognized academic leadership... Read More
If you are in the parking business and own or... Read More
Every business experiences slower periods. For some, they sell more... Read More
1. Largest Selection -One way that you can make your... Read More
Many of Ohio's downtown areas are in need of upgrading... Read More
Business rises and falls on leadership. According to business guru,... Read More
How often does your company make a quantum leap forward?... Read More
From time to time there seems to be a flurry... Read More
Imagine an office without a desk, or lights, a computer,... Read More
So what makes a vision successful? Everyday companies try to... Read More
Strategic Planning |