I might sound odd when I say that for your business to become investor-ready you need to have a plan for exit. Though your exit will be a long way down the road, potential investors will want to see what your future strategy is before investing their money.
Not only do the investors want to see that you have a strategic direction for your exit but also your type of exit may also affect their decision.
In this article I will lay out what investors are looking for in your exit plan and how exiting through a trade-sale or succession may affect potential investors’ decisions.
What do investors want to see?
Most investors will want to see your strategic plan on how to maximise your business’ value before your exit because this will directly affect their returns.
Some investors will be more open to high risk but high reward investment opportunities. For these cases, it is up to you, in the pitch, to convince the investors that risk is worth the reward.
In order to ease investor concerns about risk, you will need to lay out a clear and viable strategy for your business that shows you’ve done everything possible to lower any risk.
Other investors will want more certainty with their money and therefore will be looking for lower risk but lower reward opportunities. As part of your strategic plan you need to make sure you are approaching the right investors who may be attracted to your business.
Other investors may be looking to part fund your business for philanthropic reasons. These investors are harder to find and your business would need to have a core attraction beyond its future profits.
Other factors to consider when looking for investors is that some may want to be more involved in your business than others and some may want to invest to complement their own portfolio.
The crucial thing your business must do is heavily research potential investors so you know who is right for your business and how to pitch to them.
How will a trade-sale affect potential investment?
Trade-sales are perhaps what you’d immediately think of when strategising your exit. It is simply taking your business to the market and looking for a buyer. This is typically the exit route that will maximise your profits through a sale.
