What is the exit strategy?

■ This is an important question. An equity investor’s strategy, particularly an equity fund, is often to invest the equity, make a quick killing, and look for another opportunity to do it again.

■ The shorter and more clearly defined the exit strategy is, the more likely the outside equity investor will be to invest in your deal.

■ Also, as you should have noted in chapters 8 and 9, your investor’s IRR is primarily driven by the exit strategy (i.e., the assumed sale at the end of the investment period). The shorter the period until the assumed sale, the higher the projected IRR will be