There’s a new school of thought in startup financing based upon a book called Ultimate Exits by Dr. Tom McKaskill. You can download the Ultimate Exits e-book and it’s accompanying workbook for free from Dr. McKasKill’s website. (He’s also got a ton of really great e-books on Amazon.)
Eric Dobson summarizes the book’s key themes for us:
“[Entrepreneurs have] been taught our goal is to create shareholder value and [to the contrary] the book says in the short run you need to create acquirer value. The reality is if you create certain products that fill a known obvious niche for a big player you may get a speculative bump on your valuation that may far exceed anything you can drive in revenue.”
Filling an obvious niche is very much like listening to your customers to learn what they want to buy.
Eric thinks this viewpoint is full of great lessons for founders.
“If you are going to build something, build something with a need in mind. Understand who the acquirers are. Be able to names names. [For example, approach an investor and say,] ‘Here are three companies that need what I do and they would be interested in me because I’m going to do this [specific plan] and I plan to liquidate in 3-5 years.’ Just have a solid plan to [take that approach].”
“You can always change your plan, but do it out of opportunity not out of duress.”