ESOP: Another Exit Strategy for a “Mature” Tech Company

August 15, 2013Articles New Jersey Tech Weekly

The usual exit path for the entrepreneur who started a tech company is a sale to either a strategic or a financial buyer. Undoubtedly the strategic buyer who rides in over the hill with a highly attractive, all cash offer is the dream of most startups.

Not quite as attractive is a generous, mostly cash offer from a financial buyer, such as a private equity fund. But as many entrepreneurs are well aware, both strategic and financial buyers have their own agenda, and are not necessarily interested when the owners of a startup want to (or need to) sell.

One alternative is for the entrepreneur to create one’s own financial buyer. It is a little known fact that such a buyer exists and is available in most instances. To understand how this works, a few basics about the mechanics of these transactions is necessary.

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