We need to consider the type of exit strategy, the type of buyers, and the sector outlook.
Type of exit strategy: we could do an IPO, sell to a strategic acquiror, or sell to a private equity company
Type of buyers: Will the buyers be strategic, financial sponsors, or both? Which sectors are they in? In the past, has there been M&A activity in this space, and if so, were those buyers mostly strategic or financial sponsors?
Sector outlook: What size is the end market? How large will the market be by the time we sell the company? What are the industry growth rates, and which key trends are happening which could affect the company’s positioning? Is the industry consolidated or fragmented? If it’s fragmented, could there be an opportunity for a consolidation (roll-up) strategy for the next buyer? Have there been IPOs in this space, and if so, what multiple did the companies IPO at?
Potential synergies: What are the revenue and cost synergies that could be realized by a strategic acquiror or by a financial sponsor with similar portfolio companies?