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. Lump sum amount differ depending on how much the investor gave when he is still beginning to do his investment.
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?
What is the meaning of trade 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. This is considered as an attractive option especially if the investor will still be allowed to become a minor shareholder so that he will still be able to receive some shares for a number of years since the management of the business will be passed on to people who can be trusted and are familiar with the setting of the business in the industry therefore all future revenues can 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. 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:
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.
How did the other shareholders do their exit?
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.