My Article Database: Free Articles for Teaching and Studying English as a Foreign Language in China - by Paul Sparks




 Homepage
 About Me
 Teachers
 Students
 Lessons
 Photographs
 Links
 World News
 ICQ Chat
 Contact Me
 Articles
 
My Article Database:

 

Accounting
Acne
Adsense
Advertising
Aerobics
Affiliate
Alternative
Articles
Attraction
Auctions
Audio Streaming
Auto Care
Auto Parts
Auto Responder
Aviation
Babies Toddler
Baby
Bankruptcy
Bathroom
Beauty
Bedroom
Blogging
Body Building
Book Marketing
Book Review
Branding
Breast Cancer
Broadband Internet
Business
Business Loan
Business Plan
Cancer
Car Buying
Career
Car Insurance
Car Loan
Car Maintenance
Cars
Casino
Cell Phone
Chat
Christmas
Claims
Coaching
Coffee
College University
Computer Tips
Cooking
Cooking Tips
Copywriting
Cosmetics
Craft
Creative Writing
Credit
Credit Cards
Credit Repair
Currency Trading
Data Recovery
Dating
Debt Relief
Diabetics
Diet
Digital Camera
Diving
Divorce
Domain
Driving Tips
Ebay
Ebook
Ecommerce
Email Marketing
E Marketing
Essay
Ezine
Fashion
Finance
Fishing
Fitness
Flu
Furniture
Gambling
Golf
Google
GPS
Hair
Hair Loss
HDTV
Health Insurance
Heart Disease
Hobbies
Holiday
Home Business
Home Improvement
Home Organization
Interior Design
Internet Tips
Investment
Jewelry
Kitchen
Ladies Accessories
Lawyer
LCD / PLASMA
Legal
Life Insurance

Return to Articles about Business Plans

Documenting the Exit Strategy in Your Business Plan

by: Dave Lavinsky
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:
GT 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. GT Business Plans is the sister site of GT Venture Capital


Circulated by Article Emporium

 

New! Watch Online Articles with YouTube for Free:

 

 

 

 

Click Here to Return to Top of Page