Many private investors are not only looking forward to getting money on a regular basis but they are also thinking about the future when they will be ready to retire from their attachment with the business and get their lump sum to be considered as their greatest financial reward. There are different exit strategies that investors make use of that is why the amount of lump sum will depend on this.
A list of exit strategies
A Private investor has different exit ways to choose from which has its own advantages and disadvantages. Here are the most common ones:
What public flotation is
Investment in trade and sale
What process do you need to follow when you do management buyout?
Staff members and key individuals are given a chance during a management buyout to secure their finances by purchasing a part or all of the interest that is held by the investors or the business owners. If the investor will be allowed to retain a minority of the stocks, he can still be able to receive income for a few years that is why this is considered as an attractive option, considering that the people who will be handling the business are those who are already familiar with the market so there is an assurance that all future revenues will be maximized.
Working out the value that the business needs and pro-rating this is such an easy job compared to calculating the share of the investors, maximizing the sale price so that there will be more income to be shared, and making sure that the price will be right for the business. There are several different factors that might be able to affect the price that can be greatly achieved for this that is why it would be best for a private equity investor to make sure that a step is being taken in trying to control as many of these disadvantages as possible with regard to the investment. 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:
Making sure that all information that is to be reported is true and correct
If an investor is able to come up with more positive information about how the business is able to function well as well as the projections and prosperity of the business for the future, he will surely have a better plan for his exit strategy and for getting back a large amount of his investment.
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.