Whenever I’m asked about the exit strategy for our company, my response is always “our goal is to build the best possible company, and if an offer comes along that we can’t refuse, we’ll take a look.” The general idea is that it’s best to build a sustainable, high-growth company that makes great, long-term decisions. Pushback I’ve gotten over the years from this strategy is often along the lines of “that’s great, but how do your employees that have equity get to cash out if you have no plans to sell the business.” My response is that our employees are compensated at market-rate salaries and the equity component should be seen as upside that might or might not happen.
There’s another group of entrepreneurs that have an exit strategy — e.g. when we get an offer for $25 million, we’re selling — and, of course, there’s no right or wrong. With a defined exit strategy, or at least a target exit range, it’s important to get all the founders and investors on the same page. If an offer does come along to buy the business, and the leaders aren’t aligned, it can lead to serious internal challenges (things get emotional quickly).
Entrepreneurs would do well to think about their personal approach to the exit strategy question, and if they have a target acquisition price in mind, share it with their inner circle.
What else? What are some more thoughts on a defined exit strategy vs the built to last answer?