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Documenting the Exit Strategy in Your Business Plan > NetSparsh - Viral Content you Love & Share

Documenting the Exit Strategy in Your Business Plan

All investors greatly desire and are motivated by a clear picture of a company's exit strategy, or the timing and method through which they can "cash in" on their investment. This picture best comes into focus when the key valuation and liquidity drivers of the company are clearly delineated. An excellent method to accomplish this is through descriptions of comparable firms that have had successful liquidity events, either through acquisition, merger, of initial public offerings (IPOs).

It is helpful to show other companies in your market, or similar companies in other markets, who have successfully exited, and how and why these companies were successful. For instance, were they successful since they acquired a large customer base? Or were they successful since they accomplished fast growth or high profit margins? It is also important to tie their success to their exit price. Was the exit price based on earnings or the number of customers the firm had at the time? The business plan should tie these metrics (e.g., exit price of $X per customer) to the business to determine its future price.

The most common exit strategies in business plans are IPOs or acquisitions. While the method of exit is not always crucial, the investor often wants to see the decision to better understand the management team's motivation and commitment to building long-term value. If acquisition is the selected exit path, then the business plan should detail potential companies that might want to acquire the firm in the future and why. Likewise, if an IPO is expected in the future, the business plan should document the financial metrics of the company that make it ripe for this type of exit.

In most cases, investors only make money when the business reaches a successful exit event. As such, it is critical that business plans explain the expected exit, detail why this exit was chosen and validate a realistic exit price.

As President of Growthink Business Plans, Dave Lavinsky has helped the company become one of the premier business plan development firms. Since its inception, Growthink has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share.

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Hartford Courant

Work Continues On Sterling Community School Strategic Plan
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Acting Superintendent Gail Lanza said the plan will provide focus and a vision and a mission for the future. "We're doing it to provide structure to the district," she said. "It will be a blueprint moving forward." A strategic plan sets out a district ...


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WV News

Fairmont State Board of Governors approve strategic plan, moving forward in Bridgeport
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The Fairmont State University Board of Governors approved a new strategic plan, as well as the start of planning for the university's Charles Pointe location, during a meeting Thursday. Board members also got updates on athletics and finances ...


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Exclusive: Wright State University President Cheryl Schrader talks ...
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Willoughby-Eastlake Library contracts with Lakeland for strategic ...
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The Willoughby-Eastlake Library Board and Lakeland Nonprofit and Public Service Center have entered into a strategic planning agreement.

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MLive.com

Hopkins Public Schools embarking on strategic planning process
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Residents of the Hopkins Public Schools district will get to weigh in on the schools' future through a public meeting and an online survey, both part of a planning process announced by the district last week. A meeting about the new three- to five-year ...


Rio Blanco Herald Times

Strategic planning for heritage tourism planned for March 2-3
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RBC | RBC Historical Society was selected by the Colorado Tourism Office for a CHAMP grant to conduct a countywide Craft Mentor strategic planning seminar on Friday and Saturday March 2-3 at the Old West Heritage Culture Center (OWHCC), 517 Park Ave, 9 ...


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