The Essentials of Professors – Revisited
July 15, 2019
Private investors do not just invest simply because they want to get the money that would be given to them on a regular basis, but they are also doing this as a plan for their future when they will be ready to end their connection with the business and receive a lump sum as their greatest financial reward. At this stage, the amount of money that an investor is going to get will depend on the exit strategy that he is able to come up with.
A list of exit strategies
A Although private investors have a lot of exit routes to choose from when they want to end their involvement in business, each route has its own advantages and disadvantages such as:
What is meant by public flotation?
All about trade sale
What is management buyout?
A management buyout is known as a transaction of which the company’s management team will be given the chance to purchase the operations and assets of the business that they are managing. This option is considered to be very attractive to investors if there is a compromise of allowing the investor to continue in receiving money from the shares for a couple of years since the business will be passed on to people who are well acquainted with it, therefore, all future revenues will surely be maximized.
Rather than being an employee, the manager can now be the owner because of a management buyout, however, it is not easy to calculate the value of an investor’s share, provide the buyout plan of the business, and maximize sale price for the investment that is why many things are really at stake here. 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. The price of the investor with regard to the investment that he is going to dispose of can be greatly affected by a lot of factors like:
Good timing
Making sure that all information that is to be reported is true and correct
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.
Did the other shareholders have an exit strategy?
It is important that a private investor is able to convince other investors to sell their shares together with him since this will surely increase the value of the stocks. However, if these other investors are willing to sell their stock to just one shareholder, then the value of an investment of the private investor will surely depreciate.