Multiple Exit Strategies

Over lunch yesterday an interesting discussion with a business owner.  I asked, quite simply, “what is your end-game?”

HIM:  “Oh, that’s easy, he replied.  I’m going to sell the company.”

(Editor’s note — despite the use of quotation marks, I’m paraphrasing based on my recollection of the conversation that followed.)

ME:  “But didn’t you tell me a few minutes ago that you and your father own the company together?”

HIM:  “Yes.”

ME:  “Is your father’s exit timetable the same as yours?”

HIM:  “Well… at one time it might have been, but he’s older now than he was then and there is still an awful lot I want to be able to do with the company to reach our full potential.  So I guess not.”

ME:  “So really, you might need two exit strategies, right?  Perhaps his exit involves you and who knows where the money will come from.  Then yours might be a purely third party deal later.”

Later in the conversation…

HIM:  “We need some growth capital, and I would be willing to part with some of the ownership in order to get in a good partner and some funding that would help us execute on all of our plans and ambitions.”

ME:  “That may or may not be wise, but have you considered that now creates a potential need for 3 different exit strategies and/or timetables?”

HIM:  “Uh-h-h…”

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