Chapter 14: Harvesting and Existing the Venture: Options and Alternative

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What steps are involved in selling an equity stake to a strategic partner?

Selling an equity stake in the business to a strategic partner can substantially increase the value of the venture and offer an exit option to the entrepreneur.
What is required is a targeted effort of why an alliance partner should purchase a majority or minority stake and the reasons and justification for the sale Usually for the entrepreneur to sell an equity position, the partnership must be beneficial to all parties.
In most cases, an alliance is formed first. After measuring the success of the relationship, an equity position is negotiated to sell out completely or receive a minority stake in the What procedures are involved in selling a business?

What are the major pitfalls in creating an alliances?

The First pitfall is not knowing what the value of the alliance is to the business. The most common value for most alliances is increasing the revenue or decreasing the costs of operation.
Before any serious negotiation, however, this value needs to be determined and both sides require an evaluation to quantify the present and potential market opportunities.
Also the pitfall to the entrepreneur is to identify what the alliance will cost in time and money. For example, a relationship with a partner may limit the chances of selling the venture to the company’s competitors.

How can entrepreneurs ensure that their strategic alliances are successful?

Identify the objective of a proposed alliance. The entrepreneur should determine the time requirements and what are the expectations of the parties involved in the process.
Build a target list of possible candidate companies. It is best to go after more than one possible partner—also a mixture of size and scope is important.
Research the candidates and examine the web sites, press releases. Determine who is in charge of business development, the CEO, president. Look at information and articles they placed. The key is to find out their mission and focus. Build a document on each target – include contact information, phone numbers, etc.
Present the finding on each target to the key members of the areas that will be impacted by the relationship (i.e. if it is software development, IT, marketing, sales, etc.) and gather the input, concerns, and interests.

Why should the venture consider a IPO?

can consider an IPO as a means to grow the business. In deciding whether to go ahead The entrepreneur with a public offering,. an important consideration for an IPO is the timing of the transaction, which can be extremely volatile.
In deciding whether to do an IPO, it is always advisable to proceed market is with a backup plan. Even if the company is well prepared and the favorable, the economy can change by the date of the IPO.
However, going public represents a rite of passage for a company and provides both benefits and obligations that should be carefully considered. The IPO process is difficult, the pitfalls are numerous and stakes are high. Poor market timing and inadequate planning can jeopardize an IPOThe following questions need to be addressed in making an IPO decision:

Are you ready to share the ownership of your company with the public?
Are you prepared to disclose your company’s most closely held secrets?
Can you live with the continued scrutiny of investors and market analysts?
Can you devote the 100 percent required of your time for six to eight months that it takes for a typical IPO?