Business exits are common within the startup ecosystem. Business exits happen through various means, such as acquisition by another company, Initial Public Offering (IPO), or a merger. Most startups aim to provide a return on investment for their investors and founders.
The exit strategy is usually determined early on and can influence the company’s growth trajectory, funding rounds, and partnerships. Ultimately, a successful exit depends on various factors, including market conditions, the company’s financial performance, and the execution of the chosen exit strategy.
According to a Morgan Chase report, about 50% of new startups exit within their first five years of operation. In this article, we share a few examples of successful business exits and some strategies and tactics companies use while restructuring.
Examples of Successful Exits and Restructuring
Let’s see some examples of successful exits and restructuring within the last decade.
Paystack-Stripe:
Stripe, a multinational financial services provider, acquired the Nigerian fintech unicorn, Paystack in October 2020. The acquisition has helped strengthen Stripe’s mission to increase the GDP of the internet, with Paystack spearheading this effort in Africa. Since the acquisition, Paystack has expanded to South Africa, integrated with Apple Pay, and updated its product offerings for businesses and individuals, making it one of the best fintech products across Africa.
Google-YouTube
In 2006, Google acquired YouTube, the largest video-sharing platform, for $1.65 billion in stock. The acquisition allowed Google to expand its offerings in the online video space and provided YouTube with access to Google’s resources and reach. The acquisition has helped Google become a significant player in the online video market and allowed YouTube to continue its rapid growth and expansion.
Facebook-Instagram
In 2012, Facebook acquired Instagram, a famous photo and video-sharing platform, for $1 billion in cash and stock. This helped Facebook expand its offerings in the photo and video-sharing space while giving Instagram access Facebook’s network and resources. Years after the acquisition, Facebook has become a dominant social media player, and Instagram has experienced rapid growth and expansion in reach and revenue.
Amazon-Twitch
In 2014, Amazon acquired Twitch, the largest live-streaming platform for video games, for $970 million in cash. This acquisition is notable for boosting Amazon’s customer reach, making it a significant player in the gaming and video streaming markets.
Apple-Shazam
In 2018, Apple acquired Shazam, a popular music recognition app, for an undisclosed amount. Apple is now a key player in the music streaming and recognition market. With Shazam integrating into Apple, the company has seen a rapid growth in the past five years.
Key Factors for a Successful Exit or Restructuring Strategy
A constructive look into successful business exits shows us that much planning goes into a restructuring process. Below, we share a few tactics and strategies for a successful business exit or restructuring.
Developing a unique product or service:
Having a great product or service is critical to a business’s profitability. Identifying a business’s unique selling point and building around it will ensure that the business outlives its founders.
Offering a unique service and optimizing profit is vital when preparing for a company exit.
Building a solid team
To successfully plan a business exit, founders must prioritize building a strong team. A team of experienced and dedicated employees is crucial to any company’s success. This rings true even after the exit of principal founders or a significant change in corporate governance.
Building a strong brand
Companies with strong brands are more likely to succeed over their competitors. Building a solid brand can help a business build customer affinity and successful collaborations. This is particularly important when founders plan to exit the company after a while.
Building a solid customer base
When preparing for business restructuring, it is essential to prioritize customer loyalty. Companies with a large and loyal customer base are more attractive to potential investors.
Having a solid financial foundation
Investors are more likely to invest in companies whose finances are in order. Keeping up-to-date books of accounts, and having a strong cash flow will help a company during a restructuring process.
Conclusion
In this article, we discussed some successful exits in the business world in the last decade and the factors to consider for a successful business restructuring process. With the help of this article, we hope you are better equipped to navigate a successful business exit.