Exit Strategies for Angel Investors – Part 1
Highlights of Exit Strategies for Angel Investors – Part 1:
- My background to put my comments in perspective.
- Organized angel investing is still quite new – only ten or twelve years old.
- Successful investing requires two things – buying right and exiting well – a lesson I learned late (and expensively).
- There is lots of doom and gloom about exits in the media – and it’s true that the big exits aren’t happening very often now.
- The big ‘new story’ is the large number of small and medium size exits – and they’ve held up well during the recent recession.
- Most private company M&A transactions are under $20 million – and probably under $15 million.
- Big companies know they aren’t good at new ideas or startups, but they are good at growing values from $20 million to $200 million.
- These big companies have lots of cash – many are spending more on M&A than on R&D. It’s the best way for them to grow.
- Even for the very biggest companies – a $100 million acquisition is already out of their ‘sweet spot’.
- The ideal size for big companies to acquire is $10 to 30 million.
- Companies are being acquired earlier and earlier – often just a couple of years from start-up.