ABSTRACT
Another key part of exit planning involves the issue of timing. First, entrepreneurs have to consider their personal preferences based on their own life and career planning. When does the entrepreneur want to retire? Does she want to participate in more start-ups? Would she enjoy a change in career after leaving the venture, such as consulting, teaching, or working with other entrepreneurs on their ventures? Second, entrepreneurs have to consider the market opportunity for a sale. In some industries, the sale of a business is a fairly rational and consistent process over time. In other industries, periods of consolidation may be episodic, requiring quick decisions about selling because the next opportunity for the desired price may be far in the future, if it occurs at all. This has been the case in many emerging industries, such as personal computers in the 1980s, managed health-care in the early 1990s, and Internet companies in the late 1990s. Many entrepreneurs in these industries failed to understand that the sustainability of these industries, or at least the sustainability of their growth, would not last indefinitely. Many held on to ownership of their businesses well beyond their real peak in value, hoping that the value would continue to go up. After high-growth industries reach their peak, the subsequent drop in value can be so rapid that many entrepreneurs fail to implement an exit strategy in time to get any real value out of their ventures. Knowing when to exit, therefore, requires attention to both personal and market factors, and these two factors do not always intersect. Ignoring either one can result in exiting too early or too late.
