No matter how well you pick and nurture startups, it’s irrelevant if you can’t realize and maximize their value through a successful exit. Handing a portfolio company over to a new owner is the culmination of the investment lifecycle, converting the investment into cash, hopefully resulting in a profitable return for the VC firm, and the founders.
The last 12 months have taught investors a valuable lesson, which is that exit planning is a vital and continuous process, and getting it right is more art than science – with a fair dose of luck thrown in. Each company and exit scenario is different, depending on a variety of factors, including the economic environment, performance, and profile of the company, uniqueness, maturity of the investment fund, macroeconomic trends, alignment between shareholders, etc.
Investors have a vested interest as they are looking to generate a return on the money within a certain timeframe, and their investors are expecting their money back with healthy interest. Similarly, founders typically have most of their wealth locked up in shares in the company and hence it is also their interest to crystalize some of this wealth.
A big part of success therefore comes down to understanding trends and movements and having an instinct as to the right moment to move. A big mistake that some companies make is rushing to sell at the wrong time when the markets are negative towards a particular sector. Scenario planning can be helpful to envisage what could happen in different situations, i.e. what if the exit timing was delayed one, two, or three years.
Technology Technology Latest News, Technology Technology Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: sdut - 🏆 5. / 95 Read more »
Source: MarketWatch - 🏆 3. / 97 Read more »