Atiku S Jauro
A00013480 (ENT 201)
A business harvest plan,also called the exit strategy is the way an entrepreneur or an investor intends to extract the capital or money spent on a business after its being successful. This section of a business plan details what strategy the entrepreneur has chosen, and how much money he expects to gain. The harvest strategy section of the business plan should specify what strategy to be taken, what the valuation will be at the time of exit, potential purchasers of the business, and how long it will take. Having a harvest or exit goal provides strong impetus and a strategic focus to create value in the business that can result in a capital gain to shareholders, the entrepreneurial team and employees. There are societal reasons as well for seeking and building innovative ventures that provide exit opportunities. Innovations and technological advances brought to industries by these companies contribute to new jobs, substantial returns to stakeholders and economic growth, Why Is an Exit Strategy Important?
Your exit strategy is important because it helps you define success in business. When entrepreneurs have not thought through an exit strategy, it may be an indicator that they are not focused on the eventual transition of the venture.
Reasons for Harvesting
To maintain managerial control and succession for successful continued operations. To initiate a “liquidity event” that will generate a significant amount of cash for the investors. An IPO (initial public offering) has become a reality.
Most realistic opportunity is sale of the business.
The main harvest options is as follows:
Initial Public offering
The sale of the company’s shares in a public offering is often the preferred harvest option. Public capital markets generally offer the highest valuation for the company’s shares, and provide initial as well as subsequent (secondary) capital needs of the company. Furthermore, a public offering...
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