Exit strategy

The exit strategy describes how founders and investors turn their company shares back into money.

The 4 most important exit routes:

1. Trade sale (sale of the company):

• Sale to a larger company
• The most common exit (approx. 80% of all exits)
• Example: Microsoft buys LinkedIn for 26 billion dollars

2. IPO (stock market flotation):

• Shares are sold publicly on the stock exchange
• Rare, but potentially the most lucrative
• Example: Zalando IPO in 2014

3. Secondary sale:

• Selling shares to other investors (not on the stock exchange)
• E.g. an early VC sells to a later VC

4. Management buyout (MBO):

• Management buys the company from the owners/investors
• Often with debt financing (leveraged buyout)

Why important? Investors (VCs, business angels) want their money back – with a profit. Without an exit perspective, no VC invests. That's why every business plan needs an exit strategy.