What does Flickr, Youtube, Whatsapp, Instagram have in common, besides being some of the most successful start-ups of recent times? They all been sold within few years of their inception. Flickr was acquired by Yahoo at $35 million and Youtube was sold to Google for $1.65 billion. Whatsapp and Instagram were bought by Facebook for $22 billion and $1 billion respectively. Planning an exit strategy therefore, becomes as important as planning a financing map.
Beneficial to all:
A clear cut exit strategy can increase the estimated valuation of your company and also reduce the exit period. An exit is a sure way for the shareholders to make loads of monetary profits. Designing and execution of a well-thought exit strategy is bankable for any business.
Have a timeline:
Some companies are sold within 2 or 3 years while for others, this time period is too short. However, this does not diminish the value of a good exit strategy. It doesn’t really matter when your company gets sold, but what matters is that you are ready with a good strategy at the opportune time.
Study your options:
There are two types of exit strategies. You could either go the IPO (Initial Public Offering) way or Acquisition and Mergers, depending on your start-up of course. For IPO, your company must have tremendous growth potential. Acquisition and Mergers is the simpler way as it does not involve much risk factor or much processing time. MakeMyTrip went the IPO way when it sold its 5 million shares. Although, IPO is virtually unheard in India.
So, consider your company’s potential as well as market conditions carefully before devising your exit strategy.
Research others and Review yours:
Always be in the loop about the exit strategies of other companies. Be it successful or not, you will always learn from them.
Keep reviewing your exit plan to fit your goals and according to the market shape. It is always better to be willing to adapt.
Businesses without proper exit plans often end up suffering from losses. Exit strategies are complicated processes requiring meticulous planning, research, careful execution and most profitable part of a company, if done right. Therefore, investors swear by them while looking for potential investments.
If you too have entrepreneurial dreams, you need to have faith in your Chatur Idea. You will always wonder who will fund this idea and from where will you find investors. In that case, you can participate in the #BeAChatur Contest and not only be mentored, but also stand a chance to win a whopping Rs.10 Lac funding for your dream startup idea.