Learning Center
Plans & pricing Sign in
Sign Out

Your Business Plan's Exit Strategy


									?Investors will be interested in the financial return they can expect from your business.
Many types of businesses only produce a significant financial return when they are
sold, often because the business does not produce excess cash which can be paid out
in dividends. It is appropriate for such a business to detail the owner's exit strategy
which shows investors of how they will reap the rewards of their stock's appreciation
in value.

What Makes a Business Sellable?

A business has a higher likelihood of being bought if the resulting merged company is
more valuable or profitable than the sum of the two companies when they are separate.
If the products, services, customers, or operations methods of your business would
complement and improve the acquiring company you stand a better chance of being
bought. Your company is also more sellable if it has a basic business philosophy and
culture which is compatible with the buyer's. Unless the acquiring company would be
buying only the intellectual property and other assets of your company, it is important
that the human talent of your company can be merged with that of the buyer.

Targeting Acquiring Companies

Just as you discussed the target customer groups in your customer analysis, your exit
strategy would do well to discuss a few potential buyers for the company. The same
type of research into these buyers is necessary as the research you did for customers
or competitors (in fact, these buyers may be the same as some of your customers or
competitors). Look at the means and motive these companies would have to acquire
yours. This includes their size and financial means and the reasons they would make
such an acquisition. It would be very helpful to look at the history the company has in
making acquisitions of other firms, especially if their situation is similar to yours.

Eric Powers is associated with Growthink, a business plan consulting firm. Since
1999, Growthink business plan writers have developed more than 2,000 business
plans. Call 800-506-5728 today for a free consultation. If you're writing your own
business     plan,    you     can   access     a     proven      template,    here:

To top