You do not have any control over when your company will exit. As an early-stage company, you should focus on building a great organization. The marketplace is very fickle—companies that would have been acquired last year might not be able to get meetings with potential acquirers this year. It is important, then that you consider exit strategy planning.
Common exit strategies involve:
In challenging economic times, it can be very difficult for early-stage companies to go public and raise financing through the public markets. Most venture-backed exits have occurred via M&A. Visit Canada’s Venture Capital & Private Equity Association (CVCA) and the National Venture Capital Association (NVCA) for the most recent Canadian and U.S. statistics on financing and exits.
Thinking about potential acquirers will help you to identify partners for your business. In fact, merger and partnership (M&P) is becoming more prevalent than M&A. Partners can provide your company with a cash infusion in exchange for a “look-see” into your business. Once you scale the business and become strategic to their company, one of these partners might put an offer on the table.
If your venture is not successful, you may be forced to sell your company for less than you expected. This may include licensing a portion of your technology or selling the intellectual property (IP) to recover as much value for the shareholders as possible.
TSX listing requirements. Retrieved April 13, 2009, from http://www.tsx.com/en/pdf/TSXandTSXVenture_IndustrialRequirements.pdf.
NASDAQ listing requirements. Retrieved April 13, 2009, from http://www.nasdaq.com/about/nasdaq_listing_req_fees.pdf.