What are some viable exit strategies for a startup company?

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What are some viable exit strategies for a startup company?

6 Startup Exit Strategies for Investors

  1. Initial Public Offer. Startups, you can do initial public offers (IPO) where you sell a part of your business to the public in the form of shares.
  2. Mergers. Another important and often considered exit is a merger.
  3. Private Offerings.
  4. Cash Cow.
  5. Regulation A+
  6. Venture Capital.

How do you create an exit strategy for an investor?

Examples of some of the most common exit strategies for investors or owners of various types of investments include:

  1. In the years before exiting your company, increase your personal salary and pay bonuses to yourself.
  2. Upon retiring, sell all your shares to existing partners.
  3. Liquidate all your assets at market value.

What is a company exit strategy?

A business exit strategy is a plan that a founder or owner of a business makes to sell their company, or share in a company, to other investors or other firms. If the business is making money, an exit strategy lets the owner of the business cut their stake or completely get out of the business while making a profit.

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What are the different types of exit strategy?

8 types of exit strategies

  • Merger and acquisition exit strategy (M&A deals)
  • Selling your stake to a partner or investor.
  • Family succession.
  • Acquihires.
  • Management and employee buyouts (MBO)
  • Initial Public Offering (IPO)
  • Liquidation.
  • Bankruptcy.

Is a SaaS business one for a valuation using Sde?

An answer of “yes” to any or all of the above means the SaaS business is one for a valuation using SDE. Investors will likely appraise the business based on this benchmark alone and apply a multiple to arrive at the final business valuation. If the answer is “no”, EBITDA or revenue might be more appropriate.

Does measuring revenue make sense for a growing SaaS valuation?

Measuring revenue makes sense for a growing SaaS valuation, buts it is very important to note that this valuation philosophy is entirely based on g rowth. If the SaaS business does not grow then the revenue is not there to support the forecast profit in the future, which is what the valuation is actually based on.

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Is SDE or EBITDA a better proxy for SaaS companies?

Either SDE or EBITDA is considered the best proxy for the business’ future cash flows and is therefore the basis of its valuation. For SaaS companies, however, the EBITDA being generated today – which could be zero – is not always a good proxy for potential future earnings.

How to evaluate a SaaS business’ multiple?

Evaluating the above metrics helps determine whether a SaaS business’ multiple falls towards the low or premium end of the valuation spectrum: Age of the business: A SaaS business with a longer track record demonstrates that it has proven sustainability and is also easier to predict in terms of future profit.