Exit Strategy
Alle Begriffe
What is an exit strategy?
Short answer: An exit strategy is the planned route for owners or investors to turn their stake in a business into cash or another liquid asset.
In corporate finance, the exit strategy affects how a company is prepared, which buyers or investors are approached, and what evidence is needed to support valuation.
Common exit routes
- Trade sale: Selling the business to a strategic buyer that wants market access, capabilities, customers, technology, or scale.
- Financial sponsor sale: Selling to a private equity or growth investor that plans to build the business further.
- Management buyout: Selling to the existing management team, often with external debt or equity funding.
- IPO: Listing shares on a public market. This is suitable only for companies with the scale, governance, reporting quality, and market profile required by public investors.
What makes an exit strategy credible
A credible exit strategy links the company's value drivers to likely buyer logic. It should address timing, valuation evidence, management readiness, diligence materials, and the founder's role after completion.
Verwandte Begriffe
Adjusted EBITDA
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a financial metric used to assess a company's operational performance. It modifies the standard EBITDA by excluding non-recurring, irregular, or non-cash expenses to provide a more accurate reflection of ongoing profitability.
Angel Investors
Angel investors are affluent individuals who provide capital to startups or early-stage companies in exchange for equity ownership or convertible debt. These investors often offer not only financial support but also valuable business expertise and mentorship.
Anti-Dilution Provision
An anti-dilution provision is a clause in an investment agreement that protects an investor from dilution of their ownership percentage in the event that new shares are issued at a price lower than the investor originally paid. It is commonly included in venture capital and private equity agreements.
Bootstrapping
Bootstrapping in business refers to starting and growing a company using personal finances or the company’s operating revenues, rather than relying on external funding or venture capital. Entrepreneurs use their own resources and reinvest profits from initial sales to fund further growth, emphasizing financial independence and careful cash flow management.
Bridge Loan
A bridge loan is a short-term loan used to meet immediate financing needs while waiting for more permanent funding. It serves as a temporary solution to bridge the gap between the need for funds and the availability of long-term financing.
Cap Table
A Cap Table, or Capitalization Table, is a detailed spreadsheet or document that outlines the equity ownership, types of shares, and ownership percentages of a company. It includes information on founders, investors, and employees, as well as the dilution of shares over time through various funding rounds and option grants.
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