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Financial Empowerment

Exits and Exit Strategy

When investors ask about a company’s “exit strategy” they are referring to how and when a company is likely to pay back investors. Most privately-held businesses in America “exit” through a sale to another company, ideally one with lots of cash! Few companies create exit opportunities for their shareholders through a public offering of a company’s securities.

Most investors in seed-stage and early-stage businesses expect to exit within five to seven years from the date of investment. Investors in expansion-stage businesses tend to be less patient and prefer to exit within three to five years.

Business founders who always want to run their companies and don’t ever want to sell their businesses to another corporate entity are not ideal partners for angel investors or venture capital funds.

Recommended Action Step:

Create a list of target acquirers and consider exactly why each company would benefit from owning your company’s assets, intellectual property or customer base in the future. Perhaps these same companies can become great strategic or joint venture partners today! Think about it.

Accounting for Organization Costs Acceleration Clause
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