Exit Strategy

Potential investors will focus on the exit—the point at which they will make their money. There are only 2 options for an exit strategy: merger/acquisition or IPO. Provide a couple of credible exit alternatives with supporting evidence (e.g., precedent transactions, publicly traded comparables, etc.) and potential valuations.

• Be specific. Who are the potential acquirers? What are valuation multiples you are using to determine your exit? Name precedent transactions or public comparables you are using to support those multiples.
• It is not sufficient to simply say, "We will either be acquired or be positioned for an IPO”
• Have more than one exit alternative. For example, if you believe that your company will be acquired, it is better to identify several potential buyers rather than just one

Jaimee Wolf, Xicat Interactive, New York 2001 (0:44)

Wolf gave credible examples of both trade sales and initial public offerings. She offered two separate precedent transactions and one specific company's public market performance as analogs.