Invest to Exit is an essential read for private equity investors

This book provides a detailed examination of the investment and exit opportunities in financial and strategic ventures. Underpinning the creation of value in both of these ventures are the drivers of high growth potential. In the case of a financial venture, the business itself must create the business model to exploit the growth opportunity. A financial business must build an organization which is capable of creating, delivering and supporting products and/or services in very high volumes. The probability of creating a successful high growth venture is very low due to the complexity of building out such a business model. Only the most successful will be able to drive the revenue and profit needed for an Initial Public offering (IPO). Those which are not able to achieve an IPO need to structure themselves for a financial trade sale.

Businesses which create value by developing an asset or capability which could be exploited by a large corporation achieve an exit through a trade sale to a strategic buyer. Strategic value is created through intellectual property or deep expertise which creates a sustainable competitive advantage in the hands of the strategic buyer. It is the strategic buyer who exploits the growth potential through an extensive distribution network.

The major recommendation in the book is that Angels and VC investors should focus on strategic value investments. These investments have very focused exit strategies which generally have lower execution risks, shorter timescales and higher returns than financial trade sale exits or IPO exits.

The book provides a detailed analysis of the product or service characteristics which create strategic value, a set of guidelines for identifying strategic buyers and processes for setting up the investment deal and the strategic sale.

Included in the book is a detailed explanation for preparing a business for a strategic exit.

The book has 15 chapters covering the following:

1. Begin with the end in mind
2. High growth - high risk
3. Spot the IPO
4. Financial v.s strategic exits
5. Threats and opportunities
6. Identifying strategic value
7. Finding strategic buyers
8. Enabling the opportunity
9. Reducing risks to the buyer
10. Setting up the exit deal
11. Evaluating potential investments
12. Executing the exit strategy
13. Structuring the trade sale deal
14. Selecting professional advisors
15. Conclusion - impatient capital