Getting out of the business and how to move on to the next one is a great question to look into. What is the best way to go about it? Who is the best person to sell it to? What is the best situation to sell it in? Should you take it public and try and get a lot of money back? Is the company you are getting out of even big enough to really take public? Does it have any financial value or could a company use the idea behind it strategically? Should I just sell my portion back to the entrepreneur? Should I stick around for the cashflow?
All of these are on the table when looking to get out of your company and move on, however, only a few of these really caught my eye and fit what most people would probably be doing. The chapter primarily hit on big businesses, and even had a portion discussing why VCs are so great at investing to gain returns. As I was reading, it did not touch much on smaller companies and handlings in them. Most companies are not quite big enough to go public but still require some investment. I think that some of these harvesting methods still fit in with actions in smaller investments and companies.
According to Robert Kiyosoky in “Rich Dad Poor Dad”, cash flow is what allows us to escape the rat race. So though you do not get your immediate capital back, when you are building cash flow you are creating a steady revenue stream which allows you to invest in more and more opportunities, as opposed to just one large opportunity at a time. You may still have some involvement with the company, however it does not have to be much.
The walking harvest is one method that I would consider to be one that I would follow. Then there is the strategic sale where your company has not financial value to you, however it could be of great use and innovation to a greater company. One example of this that I thought was ingenious was Kevin Plank at Under Armour purchasing MyFitnessPal not because it drew in great profits, but it had a huge amount of users and with that came data he could use to help his clothing company. He now had direct access to information and data that other sporting good companies did not. Nike had a form of it, but now Under Armor could compete. I saw this more of a strategic purchase than a financial since it had more info value than cash value.
Every form of harvesting seems to have its own value in whatever way. Even the negative harvests allow you to not have to pay some of the excess fees because you literally have no money. That is not exactly positive but it has some good news with it in that circumstance!
Depending on your goal, purpose, and long term plans can greatly decide how you should go about removing your self from a company. At my age, cashflow is a great thing, however for someone who already has a great amount of cashflow and wants to do bigger deals, they may want to sell their shares at a great profit, even though there is not perfect time to sell, in order to invest at a greater level. Having a long term plan seems to be a major commonality in all of these harvest ideas that I am noticing. Where do you want to go and end up. Go ahead and plan ahead and know what you want to accomplish with each investment so you can go ahead and plan your exit.
- Germano, Sara. “Under Armour Says Data of 150 Million MyFitnessPal Users Was Exposed.” MarketWatch, 29 Mar. 2018, http://www.marketwatch.com/story/under-armour-says-data-of-150-million-myfitnesspal-users-was-exposed-2018-03-29.
- Kiyosaki, Robert T. Rich Dad Poor Dad. Plata Publishing, 2017.
- Amis, David, and Howard H. Stevenson. Winning Angels: the Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.