To invest money an investor asks the typical following questions:
- How much do You need in total for Your project ?
- How do I recover my investment ?
- How long until I recover my investment ?
- What is my Guarantee?
- What are the risks ?
- Have You done it before ?
- What are the critical success factors ?
- What is in it for me ?
- How much profit can I make ?
Therefore, it is difficult for a company to raise private equity unless an investment exit or disinvestment strategy is given to the investor. The traditional investment investment exit or disinvestment strategies are the following:
- The buyback of the shares of stock by the issuing company is slow, uncertain and rarely much profitable.
- The acquisition of the shares of stock by a third-party is also slow and uncertain but when it happens tends to be very profitable.
- The merger or reverse merger of the issuing company into a publicly listed company resulting in the shares of common stock being listed.
- The exchange of the shares of common stock of the issuing company against those of a publicly listed company enabling the investor to sell or pledge at wish the shares of common stock of the listed company.
- The Initial Public Offering (I.P.O.) of the shares of stock which is by far the Best, most expeditious and most profitable solution enabling the investor to sell or pledge at wish the shares of common stock of the newly listed company.