All investors desire and many are motivated by a clear vision of a society exit strategy, or the timing and method by which they can “cash” on their investment. This picture is better when the emphasis on key valuation and liquidity drivers of the company are clearly delineated. An excellent way to accomplish this through descriptions of companies which have achieved liquidity events, whether by acquisition, merger, an initial public offering (IPO).
It is useful to demonstrate to other companies in your market or similar companies in other markets, which have emerged successfully, and how and why these companies have been successful. For example, they have managed since they have acquired a large customer base? Or are they successful since they have achieved rapid growth or high profit margins? It is also important to link their success to their exit price. Does the exit price based on earnings or the number of customers the company had at that time? The business plan should link these parameters (for example, output prices $ X per customer) the company to determine its future price.
The most common exit strategies business plans are IPOs or acquisitions. Although the method of exit is not always essential, the investor wants to see the decision to better understand the management team of motivation and commitment to building a long-term value. If the acquisition is the output selected path, then the business plan should detail the potential companies that might want to acquire the company in the future and why. Similarly, if an IPO is planned for the future, the business plan should document the financial parameters of society that make it ripe for this type of output.
In most cases, investors only make money when the company reached a successful exit. As such, it is essential that business plans should explain the exit, detail why this exit was chosen and validate a realistic exit price.