A 2014 survey by PwC indicates that most Canadian tech CEOs are focused on an early exit by way of acquisition.
While PwC concludes that more companies should plan to grow their companies, for my part I am pleased to see that CEOs are becoming more realistic. The fact that only 7% believe that an IPO is the most likely exit, demonstrates that CEOs get it. It is a huge culture shift for companies to evolve from an agile private company to a successful public company.
However companies that want to grow their companies can also look at an MBO (“Management Buy Out”) as another viable exit strategy for angel investors – at least in some circumstances. For BC-based companies the BC VCC Program helps reduce the risk for angel investors. Once a company has traction and has turned the corner to profitability, there are many more conventional financing options available. Mezzanine financing can be used by profitable companies to buy out angel investors – particularly where a proven management team is behind the deal. The money isn’t cheap – but it is cheaper than equity!