Why There’s No Such Thing as An Overnight Exit Strategy

4/12/12

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cover your sector and involve them in your thought process. They can provide valuable insight into what the market will bear, what acquirers are looking for, and the likelihood of reaching your desired outcome within a specific time frame.

It’s important to note that the process I laid out above should be completed at least 24 months prior to an actual exit. Those steps are more preparatory in nature, helping set the stage for the actual solicitation and execution of the exit in the year leading up to it.

Once you have each of the three things above ironed out, you should spend at least 12 months focusing on these activities:

1. Identify a banker that covers your market: He or she will help you uncover and engage all potential acquisition prospects, and better understand their priorities and appetite.

2. Start building relationships with prospects: Start with product integration and follow it up by joint selling and engaging a prospect’s sales team.

3. Retain a banker for the “soft sell” process: Have that banker begin by soliciting interest in a partnership with a prospective acquirer, without giving the impression that you’re actively looking to sell.

4. Take an inbound offer and shop it: The best companies are bought, not sold. So, if you receive an inbound offer for acquisition and it’s not the perfect offer, don’t be afraid to ask your banker to shop it around. Doing so will create a competitive bidding situation that maximizes your outcome.

Sounds like a lot of work, doesn’t it?

Truthfully, successful exits are. And they should be. Very few companies’ products or solutions are so obviously valuable that they don’t have to lift a finger to pursue an acquisition. So, for the rest of us, that means cultivating and executing an exit strategy requires long, hard thought, followed by deliberate action to achieve it.

Translation: If you want to wake up tomorrow to a cash windfall and the wildly successful exit you’ve been dreaming of, you better have spent the previous year or two working to achieve it. Otherwise, you’re probably chasing an exit strategy pipe dream that will never actually happen.

Firas Raouf is a Venture Partner at OpenView Venture Partners, an expansion-stage venture capital firm focused on providing technology companies with deep operational support. Follow @

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  • http://www.nextdocs.com Zikria Syed

    Good article Firas. Thoughtful and very applicable.

  • http://www.openviewpartners.com Firas Raouf

    Thanks for the comment Zik. Not much for you though. You’re well on your way to build a great big independent company. You’ll be an aquiror before you know it.

  • http://www.hirevue.com David

    Sage advice!

  • http://www.openviewpartners.com Firas Raouf

    Thanks for your readership David!