Exit Path: Hows to Win the Startup End Game
McGraw Hill (July 2022)
How and why good exits happen when companies are bought, not sold.
The reasons vary, of course, but most startups fail within five years after their launch. The same can be said of most exit strategies. Touraj Parang wrote this book for those who are now thinking about launching a startup or have already done so. He asserts that “advance planning and deliberate execution are key to a successful outcome.”
He then advises his reader, “Without a well-formulated and well-thought-through exit strategy, you will be dangerously unprepared to either create or properly take advantage of strategic opportunities. And you’ll certainly not be able to handle sudden changes in market conditions posing an existential threat to your business.”
Here is how Parang organizes and presents an abundance of information, insights, and counsel:
Part I: How to obtain data and arguments needed for successful exit planning
Part II: How to design an effective and actional plan
Part III: How to develop what is needed to maximize chances for success
Part IV: How to obtain and negotiate acquisition offers
These are among the dozens of passages that caught my eye, also listed to suggest the scope of Parang’s coverage;
o Offsite strategic brainstorming and planning (Pages 27-41)
o “Exit Strategy Canvas”(44-53)
o Relationships (65-101)
o Adopting the Networker mindset (68-73)
o Growing/nourishing network of contacts (72-80)
o Creating strategic alliances (80-90)
o Creating lasting relationships (85-90)
o Cultivating “champions” among allies (90-101)
o Exit team (103-121)
o Legal advisors (108-112)
o Multi-dimensional leverage (123-143)
o Starting the sale process (159-183)
o Four-stage Transaction Phase 1: Term Sheet (185-219)
o Diligence (192-198, 215-216, and 225-228)
o Transaction Phase 2: Agreement (221-233)
Obviously, not all startups fail. Even so, those who share the ownership of a startup would be well-advised to develop, refine, and modify an exit strategy that will guide and inform their efforts to achieve a “successful outcome.” Keep in mind that most (if not all) of the current Fortune 500 companies in the U.S. were originally a startup and most (if not all) of their founders were entrepreneurs.
In their recently published book, Launchpad Republic: America’s Entrepreneurial Edge and Why It Matters, Howard Wolk and John Landry explore an historical period that extends from the colonial settlements through the current day, focusing on what they characterize as a “balancing act between rewarding builders and enabling challengers, often the same people.” This force, this entrepreneurial edge, “has been at the heart of the American entrepreneurial economy. It has been our internal combustion engine of progress.”
I commend them on their book as well as Touraj Parang on his.
I also highly recommend two other sources: American Entrepreneur: The Fascinating Stories of the People Who Defined Business in the United States, co-authored by Larry Schweikert and Lynne Pierson Doti, and, Eric Ries’s The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.