Explore Exit Strategies In Detail

Online Learning with Real Business Case Studies

Arriving at the logical conclusion for investments is as important as the investment itself. The founders need to provide their investors with an exit. This exit can be in multiple forms. It can be a strategic merger and acquisition, secondary sale or an IPO. The exit options evolve with changes in the market and in the business itself. Knowing various exit strategies and learning from other business examples can really help in decoding exits for one's own investors. This FundEnable course is designed to explain various exit strategies with the help of popular business case studies.

What You Will Learn

The FundEnable Takeaways

The Learning Outcomes of Exploring Exit Strategies

  • Know the different types of exit options available for investors in your business

  • Gain in depth understanding of secondary sale, mergers and acquisitions and IPO

  • Map the right exit strategy for your business and work on it from early on

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Frequently Asked Questions

  • Can a startup go for an IPO?

    BSE has come up with BSE Startup Platform. Startups fulfilling the criteria for listing can actually go for an IPO on the BSE Startup Platform. The company should be registered as a startup with MSME / DIPP and should have paid-up capital of minimum INR 1 Crore. The company needs to be in existence for a period of 2 years. The net worth should be positive. A full list of criteria is available on the BSE website.

  • Is it possible that primary infusion and secondary happen during the same round of funding?

    Yes. Large funds at times buy out existing investors in the company (secondary) and at the same time also infuse capital in the business (primary). Typically angels get an exit during Series B or subsequent rounds. The incoming investors can do a mix of primary infusion and give an exit to some of the existing shareholders such as the angels.

  • Who decides the option to be chosen for the exit? Founder or Investor?

    The company board takes a call on such matters. However, large shareholders have VETO over important matters such as exit. Hence investors definitely have a say in which option to go for.

  • Are there any consultants who can help companies to go for an SME IPO?

    An SME exchange is a dedicated exchange for Small and Medium Enterprises. In India, both BSE and NSE have SME Exchanges. SEBI registered Merchant Banker is the prime entity that helps companies go for SME IPOs. A full list is available on SEBI website.

  • What happens if the company cannot provide an exit to the investors due to the poor performance of the business?

    At the end, if there is no exit - not even through buyback then the investors have no other choice but to write-off the investment.

  • I have heard that shareholders do not always get hard cash during an acquisition. How does this work?

    At times, shareholders of a target company are given shares of the acquiring company. Acquisitions can also happen with a mix of cash and stock. Example - US$19 bn acquisition of Whatsapp by Facebook happened by giving US$4 bn cash + US$ 12 bn in Facebook shares + US$ 3bn in stock for employee retention. Hence the cash component in this acquisition was only US$ 4bn and the rest was mostly stock. (Source: techcrunch.com)

  • What is acquihire?

    "Acquihire is when a company buys out another venture primarily for the skills of the people employed in the venture and not so much for the product or the customers. Most of the companies that are acquihired have founders in their 20s who are talented and are building a technology product. Some examples include: Flipkart acquihired Mallas Inc. - a digital media distribution firm ; Practo acquihired product outsourcing firm Genii ; HolidayIQ acquihired SourceN CommonFloor acquihired messaging startup Bakfy"

  • What is the average return that investors expect during an exit? Is it different for angel, Series A, etc.?

    It is very difficult to put a number. Every investor has a different expectation. However private investments are categorized as one of the highest risk asset classes and hence the return expectation is much above the market returns.

  • Who decided the valuation during exit?

    Investment Bankers appointed for exit calculate a range based on the various methods such as Transaction Comparable, Trading Comparable, DCF, etc. It then boils down to discussions with potential buyers and valuation is discovered basis negotiations.

Terms & Conditions

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