If you have a start-up business, then it is important to provide exit strategies for your investors. It’s important to provide the best strategies.
When it comes to investing in a start-up business, you need to have an exit strategy. Without which, you might get into trouble with your money. Speaking of entrepreneurs and angel investors, exit strategy is something which is very important. By the way, what do you mean by existing strategy? Well, we are simply talking about when you intend to cash in on your investment. There are different types of exit strategies used by investors and entrepreneurs for getting maximum return on investment. Let’s take a look at the Different Strategies below.
Initial public offer
- When it comes to start-up businesses, Initial Public Offer (IPO) is a common exit strategy where you buy the part of the company in the form of shares.
- As an entrepreneur, you will be paying your investors in this manner.
- The company will be able to get access to more liquidity.
- When they have more money, they can expand their business by acquiring other companies.
Mergers and acquisitions
When it comes to start-up companies, they can run into all sorts of troubles be it problems with liquidity or cash flow. They can deal with such scenarios in an easy manner if they opt for mergers and acquisitions. The company will benefit eventually. Moreover, they will be adding to the confidence of investors. However, start-up companies are reluctant to go for this option unless things are bad. But it’s not a bad choice at all. After all, you want to see your company up and running.
Another popular exit strategy is private offerings, which many companies consider these days. What do you mean by private offering in the first place? Well, it means that you make portions of the shares available for a select group of investors. The aim is to raise funds for the company. Is this is a cost effective method? Indeed, considering the fact that brokers are not part of this scheme. Crowd funding is a perfect example of such an arrangement. The good thing is that such an arrangement is not bound by any reporting arrangements. Also, you can allow existing shareholders to be bought out.
What do you mean by cash cow? Well, we are talking about companies that have high market share in industries with low growth rate. The good thing about such companies is that they have enough capital to run their company for years. As for the profits, it will get improved with time. And they will have no difficulty in paying their investors in a long term basis. They can easily pay the dividends by cashing in on the products. If you are looking for More Investment Advice, you should Check Out The Articles In This Section.
This one has lots of similarities to IPO. If your company qualifies, you will be allowed to put your start-up company on an exchange. As a business owner, you will be able to raise money easily. However, you are supposed to follow the stipulations provided by the Companies House. You don’t have to mandatory paper works or publish accounts publicly here in this case.