The document discusses exit strategies for investors and entrepreneurs. It notes that exit strategies matter to entrepreneurs seeking a return on their work, management teams looking for the future of the company, and investors wanting a return. There are different types of exit strategies like debt liquidity through loans or equity liquidity through IPOs, mergers and acquisitions, buyouts, or becoming a cash flow business. The best exit strategy depends on matching the type of business and market conditions. Planning for different pathways is important but plans may change, so open communication between founders and investors is key.

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