Exit, Stage Left

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  • One of the things I always ask startup ventures is “What is your exit strategy”.  Many entrepreneurs have no idea what their exit would look like, many say the obvious “sell to Google, Facebook or any other company with deep pockets”.That’s not what I’m looking for.When I talk to folks about their exit strategy, I’m looking to see if they have guiding principles that will get them there safely.  A company that is not ‘clean’ will not exit cleanly.  There’s too much to hide.  No matter how you ‘muddy the waters’, new investor will find out.


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    “Pay Your Taxes, Sleep Well”This was the best advice I got from a tax-consultant, years ago. He was doing the taxes for my company and we discussed different ways to reduce tax burden.  He said that he knew people who ‘cheat the system’ and then spend an enormous amount of time covering their tracks or looking over their shoulders instead of growing their business fairly.Think about it.  If you want to sell your company, IPO, merge, whatever the exit, you better have clean books and a clean conscience.  If you’re not paying taxes, or manufacturing sales, or cooking the books to make them look better, you’re in trouble and will be in a situation where you just cannot exit.


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    Years ago I talked to a CFO friend and asked him how much pressure there was to do things that weren’t financially ethical.  He told me that the stress was there but anytime he was asked to do something he thought was wrong, he imagined himself doing the ‘perp walk’.  “Orange just isn’t my color” was one way he explained it.Do not be tempted.  You can’t hide lies.  People will know, whistle-blowers will whistle, employees will talk, the IRS and the FBI know how to get to the truth, and investors will find out.

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    So, as you start your business, any business, keep the exit in mind as a goal and a guiding principle to maintaining you ethics and morals.  However you exit, you’ll enjoy the journey with a good night’s sleep.P-Cz