The method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past. In other words, the exit strategy is a way of “cashing out” an investment.
The most common types of exits are:
M&A – merger or acquisition by another company.
IPO – public company initial public stock offering.
Take-over by a private equity firm or a strategic partner Company remains your original entity, but the buyer has the mandate of scaling the business and managing all the operational growth requirements.
Liquidate the assets, cash out investors, and keep the rest. Less preferred outcome, as the value of hard assets will be highly discounted. Assets like the brand name, business relationships may be lost or substantially devalued.
No exit. If your startup strategy is to be a lifestyle company or a family business that will grow organically and never go public, then no-exit is a valid exit strategy. Not suitable for venture capital investors.
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