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Finding a creative exit for investors

Any entrepreneur who has ever had to raise funds, be it in Silicon Valley or Colorado, is well aware of the importance of offering their investors an exit strategy. After all, an investor can exit through one of two ways: an acquisition deal or an IPO. Unfortunately, most startups can spend their entire lives neither getting acquired nor going public.

Fortunately, startups can find creative solutions when it comes to facilitating an exit for their investors, but it all starts with understanding why decent acquisition deals are a rare thing in the first place. To start with, any company that approaches a startup tends to want a part of said startup rather than the whole thing. As a result, the startup gets offered a low acquisition deal that reflects a low valuation. This leads startups to reject this acquisition offer while still hoping that a business will buy them wholesale at a decent valuation.

However, what most startups fail to realize is that this very rigid mode of thought is detrimental to their ability to offer their investors a good exit. Instead, if a startup, for instance, restructures itself to accommodate an acquisition offer, all stakeholders can realize a healthy profit. An interesting way to restructure is to focus more on specific verticals and presenting them with distinct offerings. Through fragmenting the business into smaller pieces, entrepreneurs can sell a portion of their business at a decent price and retain some of it for themselves.

Any entrepreneur who wishes to discuss the ideas mentioned here or explore some new ones may benefit from working with an experienced attorney. After all, a lawyer working in mergers and acquisitions might have seen countless examples of startups getting acquired as well as entrepreneurs who found creative exits for their investors.

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