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PRE-EXIT CONSIDERATIONS: LIQUIDITY, CONTROL, AND DILUTION

You're the founder of a mature tech company, digital platform company or tech-enabled service company that's been experiencing steady growth and success. You're excited about the future potential of your company, but you know that to continue with extended ambition, you'll need some extra cash. You've considered taking on private equity investors, but you're hesitant to give up control of your company.


That's where pre-exit strategies with private equity can be a game-changer. With pre-exits, private equity can provide liquidity to your company's early investors, founders, and employees without fully diluting your ownership and control of the company. You can sell some of your shares and still keep your stake in the company rolling over to a Newco, giving you the cash you need without sacrificing your vision.


But it's not just about the money and control. Private equity firms specialise in a "buy and build" strategy, which involves acquiring other companies in your industry or adjacent tech domains, geographies, or industries to create value by scaling and entering higher multiple categories. By teaming up with a private equity firm, you could take advantage of their expertise and resources to scale your company faster than you ever thought possible.


And here's the best part: pre-exits with private equity safeguard against the risks of a single liquidity event for you as a founder or executive team. Instead of relying on a single exit or acquisition of the company, pre-exits enable founders to benefit from multiple liquidity events as private equity firms seek to sell their stake in the company to other investors in the not to far future. That means you can repeatedly cash out over time and continue to focus on growing your company.


Of course, it's crucial to carefully consider the terms of any pre-exit deal to ensure that it aligns with your long-term goals and objectives. That's where working with a multi-disciplinary tech M&A advisor and dealmaker comes in. By balancing the needs of shareholders and stakeholders, they can help you create a pre-exit strategy that benefits everyone involved.


So, if you're a tech founder looking for a way to take your company to the next level without sacrificing control, consider a pre-exit strategy with private equity. It could be just what you need to turn your vision into a reality and unlock your company's full potential.

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