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Exit strategy luke-roush

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  • 1. EXIT  STRATEGIES   Luke  Roush   Managing  Partner  –  Sovereign’s  Capital   December  5,  2013   1  
  • 2. SOVEREIGN’S  CAPITAL      Focus  on  Healthcare,  IT/ Telecom,  and  Consumer   Products.      Focus  on  companies  with   validated  business  model   and  success  to-­‐date.      Focus  on  strong  values   alignment  and  positive   social  impact,  informed  by   faith  background  of   partners.   2  
  • 3. WHY  DO  I  LIVE  IN  JAKARTA?   3  
  • 4. WHAT  IS  AN  “EXIT”  (AKA  “LIQUIDITY”)?     4  
  • 5. WHY  DO  EXIT  STRATEGIES  MATTER?      To  the  entrepreneur…      To  the  management  team…      To  investors…   5  
  • 6. MATCHING  THE  EXIT  STRATEGY  WITH  THE   BUSINESS  –  NOT  ‘ONE  SIZE  FITS  ALL’      Debt  Liquidity:      Is  usually  structured      Can  be  term  structured  loan,  or  balloon,  or  creative  and  more  equity-­‐like      ‘Convertible  Loan’  à  loan  that  converts  into  equity  at  some  point  in  time,  at  some   price…it’s  all  negotiable.  At  this  point,  see  below.      Equity  Liquidity:      IPO      M&A      Buyout      Mgmt  Buyback      Cash  Flow  Business   6  
  • 7. EQUITY  LIQUIDITY      Management’s  View  of  the  World:      Timeframe  &  Return  Expectations      How  are  different  classes  of  equity  treated?        Your  Role  post-­‐sale?      Investors’  View  of  the  World:      Timeframe  +  Risk/Return  Continuum      Buyer’s  View  of  the  World:      Strategic  vs.  Financial?     7  
  • 8. KEY  POINTS      The  business  and  the  market  should  direct  your  planning  around  exit  strategy.      More  pathways  /  buyers  for  your  company  is  a  good  thing.  If  you  only  have  one   buyer  /  one  exit  pathway,  it’s  not  good…no  leverage.      Investors  can  be  very  helpful  advisors  in  this  planning  process,  but  they  can  also   be  overly  meddlesome…beware.      Plans  are  important,  but  be  prepared  for  change.  Talk  about  expectations  openly   with  investors…upfront  and  ongoing  as  things  evolve.   8  
  • 9. EXIT  STRATEGIES   Luke  Roush   Managing  Partner  –  Sovereign’s  Capital   December  5,  2013   9