Part 2 of 3.

Last Monday (Mar 30, 2009), I Bart Kemper of Kemper Engineering (www.kemperengineering.com) posed a question about why should someone who is not actively seeking investors or being an investor read this blog.  How would they use this information?  Why is it important?

The first answer is that it provides information that in the right setting can open up more opportunities leading to more clients. This is especially vital for a growing company working in high technology.

This week, let us look at another use for this information: how it relates to the future of the company itself.  What is the exit plan?

Will they go public and be considered by the underwriting firm?

Will they merge with another company and have to evaluate that potential merging firm?  How will that firm evaluate them?

Will the owners seek to sell the company?

In each case, someone is acting like an investor, the underwriter (and public), the two merging companies, or the buying entity.  What if the firm treats the buyer like an investor? What if they prepare like they are seeking funding?  The company will increase the likelihood of getting a better price and selling sooner.

Of course, the owners could make it a family business and give it to their children, leave it to other partners to run, or just shut it down and retire.

Next week, we will look at one final, but maybe obvious answer.