Your Exit Strategy
1)
Identify the exit strategy you plan to make. Do you intend to sell your
business in the next 5 years for a large return? Do you intend to stay with the
business for several decades and retire? Do you intend to protect the venture
as a family business, and pass it down to your children?
If my firm does play out to
be a considerable success, which I would define as sustainable control over my
market, I would be hesitant to sell for a large return. Having a real customer
demand would be the most valuable part of my company, and since there is no
real or recognizable competition, there is little incentive to give that away –
especially after we exposed and exploited the opportunity first. It is hard to
predict whether a substantially larger company would want to consume Roommates
for Change, because my opportunity would still have to be tangible, and thus they
would simply want access to my market. In summary, I would love to keep control
of the company for as long as possible, but if an offer exceeds my own
expectations of future company growth, then I would sell and capitalize into
new opportunities. Also, I do not believe this company would be under my
control long enough to be passed down to my children. But overall, I do not have
any issues doing so – just as long as I feel my children (or other family
members) are responsible and inspired enough to take over.
2) Why have you selected this
particular exit strategy?
To be clear, my exit
strategy will most likely be partnering with another firm capable to fund future
expansion. Although there would be many compromises and perhaps disputes when
collaborating with a new partner, I would rather live with this decision than be
forced to give up my company entirely. In one of my prior assignments, I shared
that I would eventually utilize this company to diversity into new
opportunities, assuming it would be the appropriate financial time and setting to
do so. As long I maintain over 50% majority to my company, I would be eager to
partner with other firms. This inflow of funds will be used to promote growth
and reach markets that were originally beyond our reach.
3) How do you think your exit
strategy has influenced the other decisions you've made in your concept? For
instance, has it influenced how you have identified an opportunity? Has it
influenced your growth intentions or how you plan to acquire and use resources?
I think this exit strategy
has influences for some of my decisions, but none influence the opportunity
itself. Adding a partner to the business plan does not change the existing opportunity
– if anything, it presents more opportunities than anticipated. Therefore, the
resources necessary to get the company started will most likely come from an
investor (who holds a small stake), with future projects/innovation being
funded primarily by my partner firm or revenue generated from the company itself
(the less reliant we are with the partner, the better).
Hello Evan,
ReplyDeleteI think it was extremely important that you gave yourself a honest evaluation of the service that you plan to offer. I think that as a person who is passionate in offering this service, you should keep the company as long as possible. I appreciate the fact that although your company could be still working long enough to pass down to your children, you were extremely reasonable about the idea. When you work so hard on a company, you don't just want to give it up into the hands of someone else and watch them benefit from it.
Dear Evan,
ReplyDeleteI applaud you for putting a lot of thought into this assignment. I was a little confused when I was doing it because I couldn't grasp my head around exiting something that isn't really real yet. But I think you got over that obstacle and really allowed yourself to think of possibilities. I think partnering up with another firm in order to expand is a great idea. I like that you would want to hang on the the thing YOU created rather than just giving it up in full - great job at thinking outside the box Evan.
I have a very similar mindset for my future exit strategy. If I have the opportunity to build my customer base and create profits that I would not want to sell it. That was my original thought, but I definitely agreed with you when you mentioned that you would probably sell it if someone offered you an exceptional price. Your plan seems very practical and I believe that you could achieve it.
ReplyDeleteHi Evan,
ReplyDeleteI think the fact that you recognize the need for inspiration and belief in the company in a successor is a really good sign for your exit strategy, that seems like one of the most important things to have if you plan on passing the company to a family member or a relative. Your idea of bringing in a partner to your firm is another really cool idea, one I hadn't even considered when I was coming up with my exit strategies. Doing so would still give you control over the company while also handing off some of the more mundane, day-to-day operational stuff to someone you trust, but also is not so close to things that they might ignore or miss a problem. I think you are completely right when you say the introduction of a partner into the mix would open up new opportunities, another entrepreneurial mind might think of things you had never even considered for your company.