Exit Strategy: is it necessary?
Last week, I had a terrific meeting with a good friend and mentor Devin Thorpe of Thorpe Capital. Not only is Devin a very savvy businessman, I like to say that he is on the “good side” of investment banking.
Devin and I usually meet once a month before the Utah Valley Entrepreneurial Forum luncheon. One of the topics that we discussed this month was the importance of having a clear cut exit strategy. It seems that the exit strategy is included in every book or article on writing a business plan, but I’m going to go out on a limb to say that having an exit strategy really isn’t that necessary!
Of course, if you are trying to seek money from an angel investor or VC, your idea must have the potential to exit at some point in the future — that is where most of their ROI will come. However, do you really need to know the possible companies that could purchase your company? I don’t think so. The problem that I foresee is that if you are focused on building your company in such a way that it will be appealing to company XYZ, what happens when XYZ decides not to make the purchase? Did you have to forego possible growth in order to appeal to XYZ? I foresee all sorts of problems when building a company with that specific end in mind.
On the contrast, what if you were just focused on building a successful company? My thought would be that if you are generating substantial revenue, your company will then be appealing to many different companies — which means that they will be competing/bidding to acquire you.
Successful company + competing acquirers + Devin Thorpe = Happy Day my friend. 
