An exit is normally time consuming and can last for longer than many entrepreneurs would have expected. And it can be complex as it involves strategic decisions, preparing the company for the exit situation and perhaps beauty contests, difficult negotiations, tons of paperwork and more.
Let's go back to the time when it first occurred to you that you should consider an exit.
Your first choice here is obviously to decide which of the options described in the previous chapter is best for you: asset sale, trade sale, or IPO? Here, you should ask yourself: ‘Who are my most obvious potential buyers?’ ‘Who will pay the most?’ ‘Why do they want to buy us or part of our activities and assets?’ ‘Why would someone invest in my IPO?’
Once you have found out who you are looking for as potential buyers, you should look at your company and ask: ‘How can I make the company worth more for this buyer – or those buyers?’ Here you must think about what your business's valuation will be based upon. It could be users, customers, revenue, gross profit, patent, or surpluses, for instance. Find out what drives the valuation and then look at how to increase those numbers. Capital funds, which typically buy more established companies, are extremely good at exactly this, i.e. to see the opportunity to create or sell value that the owners cannot see for themselves. When they buy a company, they typically invest heavily in growth at the start, ...