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.

In The News:

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City To Discuss Strategic Planning
Yankton Daily Press
Ahead of its regular meeting Tuesday, the Yankton City Commission is set to hold a special work session on the strategic planning process undertaken by the city this past winter. During the regular meeting, the board will discuss SAC rental rates for ...

FP&A & Strategic Planning Manager
You will work with business leaders to identify and interpret issues/opportunities. You will act as a financial expert on cross-functional teams to build and prepare models, reviews assumptions and project costs and benefits associated with proposed ...

Inman Select's trend reports and special reports are key to strategic planning
Inman Select was launched to provide real estate agents and brokers with a reliable, specific source for the news and information they need to thrive in the real estate industry. And it's helped hundreds of real estate professionals identify areas for ...

Strategic Planning Meeting Brings Readiness Division, Geographic Partners Together
DVIDS (press release)
During this meeting, the unit's annual plan and goals are discussed. The two-day event brings each section and directorate of the 88th RD together for day one. During that day, the group reviews the organizational strategic plan and pertinent ...

New HBA President Sets Sights on New Strategic Plan
Harris, chair of the appellate practice group at Bracewell, has been developing ideas for the strategic planning process over the last year while he was president-elect, and he wants the board to start working on a plan at a board retreat in a few weeks.

ECM Publishers

Elk board adopts 5-year strategic plan
ECM Publishers
Students in Elk River Area Schools will be expected to strive toward being better people and their district will be striving to find ways to help them. The District 728 School Board adopted the 2018-2023 Strategic Plan, which includes the mission, its ...

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Unveiling of strategic plan set for June 4
Vicksburg Post
Months of hard work will come to a culmination June 4 when the Vicksburg-Warren County Chamber of Commerce presents its strategic plan for economic development in Warren County. The plan is the result of a study performed by Vision First Advisors at ...

Sudan: Prof. Salim Affirms Importance of Role of National Council for Strategic Planning
Khartoum β€” The Minister at the Council of Ministers, Prof. Hashim Ali Salim, has affirmed the important role of the National Council for Strategic Planning in determining the general policies of state and its strategic plans and programs. This came ...

Journal & Topics Newspapers Online

Dist. 34 Recommendations Include New 5-Year Strategic Plan, Firm
Journal & Topics Newspapers Online
Glenview Elementary School Dist. 34 Supt. Dane Delli updated school members on his transition plan at Monday's (May 21) school board meeting, a project he began shortly after he took over as superintendent last summer. Among Delli's recommendations ...

Cape Breton Post

Cape Breton University launches first strategic planning process in 16 years
Cape Breton Post
SYDNEY, N.S. β€” Cape Breton University president David Dingwall says the strategic planning process the university is embarking upon won't be just an academic exercise. β€œFor the longest time, the financial plan ran the operation,” he said in an interview.

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