Our Group's Exit and the End of the Investment Relationship

Exits are at the heart of the GVCGroup's day to day business operations. The investment exit is the single goal that all endeavours are geared up for and is what pushes us and our funding network forward. Planning an exit route is an integral part of the initial decision to invest.

It should not be interpreted as a lack of interest in the company nor as a sign that the investment was only motivated by the desire for short-term profits. Our goal is to help create or develop a business that will allow all of us to dispose easily of part or all of the equity stake.

Typically, as interim funders the interval between investment and exit for our group is two to four years.

Exit strategies differ depending on the size of the company, the sector in which the company operates and the stage of the company's development. Our experience and network of contacts will help to achieve the best possible exit for us, our own shareholder network as well as for the other shareholders in the company first among which are you and your team.

Exit Routes

There are different ways in which funders can exit from an investment:

Trade Sale/Auction Sale

A trade sale, also referred to as M&A's (Mergers & Acquisitions) of privately held company equity is for us the most popular type of exit strategy and typically refers to the sale of company shares to industrial investors or same sector partners. Large and small companies often complement each other and an alliance between them allows one of them to secure a strategic advantage or complete its own business activities. A buyer is therefore often willing to pay a premium to acquire a complementary business.

The trade sale is agreed in private and makes both the buyer and the seller less vulnerable to the external pressures of a stock market flotation. We have found it advisable to keep the transaction a closely guarded secret because clients, suppliers and employees may interpret a trade sale negatively. These negative signals become even stronger if the negotiations fail.

An "auction sale" is the one exception to this secrecy rule. When the seller's reputation is not at stake and if the operation is guaranteed to succeed because the company is very well positioned an auction may be organised by specialist investment bankers. Potential buyers are subject to strict procedures and timings to ensure genuine competition between them. At the end of the process the highest bidder wins. In this way the price is maximised and the time taken to complete the sale is minimised. As we have quoted to clients in the past: “the auction arena is the one place where a seller can get more for his product than he actually wants”. Here, again, the GVC Group's experience and full scale network will be put to use to offer key advice with regard to such sales.

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