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?
Investment in trade and sale
What process do you need to follow when you do 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. 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.
What are the exit strategies of other shareholders?
There will surely be a devaluation of the investment of the private investor in case the other investors will choose to sell their stocks to a single shareholder. However, if the other investors are willing to sell their stocks together with the private investor, then the value will definitely increase.