Sunday, May 4, 2008

Starting a business designed to be sold

When considering what line of business to start or enter, can you make the exit strategy a consideration? When I refer to the exit strategy, I'm talking about more than just - let me build the business until it gets to x in annual sales or y in profit. I'm talking about designing a business model with a particular buyer in mind - either a particular company or a particular industry.

On the face of it, the idea of designing a business with a particular buyer in mind makes a lot of sense. My concerns are: By the time you're ready to sell, the prospective acquirer may decided it no longer considers that particular the one where it wants to grow and perhaps more importantly, the demand from consumers may not be there. I think its better to be nimble and, at least to some extend, let the market decide for you what business you're really in and if you read the market well enough and respond to the demand with products and services that meet the needs / desires of the market, you'll have a business someone wants to buy. It may not be the buyer you anticipated, but its one that seems to understand the value proposition you've created

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