Many private investors are not only looking forward to getting money on a regular basis but they are also thinking about the future when they will be ready to retire from their attachment with the business and get their lump sum to be considered as their greatest financial reward. Lump sum amount differ depending on how much the investor gave when he is still beginning to do his investment.
Exit strategies and what you need to know
A There are some advantages as well as disadvantages of the exit routes that private investors may be able to choose from, which includes:
The process of flotation for the public
All about trade sale
What process do you need to follow when you do management buyout?
A management buyout is considered as a form of acquisition wherein the company’s existing managers are given the chance to acquire a large portion or all of the company from either the investors or the business owners. If the investor will be allowed to retain a minority of the stocks, he can still be able to receive income for a few years that is why this is considered as an attractive option, considering that the people who will be handling the business are those who are already familiar with the market so there is an assurance that all future revenues will be maximized.
You may think that doing all this is easy, but calculating the value of the share of an investor in the business, maximizing sale price of an investment, and putting up a price for selling this business is a lot more difficult than just coming up with the correct figures to keep the business running. From the outset of the investment, a private equity investor should take steps to control all of the disadvantages that he might have to face since there are a number of different factors which can greatly affect the price that should be achieved. Some of the factors that can greatly affect the price that the investor will be able to come up in proposing for the disposal of his investment includes:
Gathering of information
In order for a private investor to maximize the return of his investment, he should make sure to come up with a good exit strategy such as acquiring some information about how the business had been functioning well through the years, and the projections and prosperity of the business for the future as well.
How did the other shareholders do their exit?
In case other shareholders are also interested in making their own exit, the value of the investment will surely increase, however, if they will decide on selling it to a single shareholder, then the value of the private investor will then be decreased because of the influence of other investors.