Exit Strategy Modeling: Perspective of Venture

Venture Capitalists (VCs) identify commercializeable start-ups which is invested by stakeholder and those agents who participate in the management board. But exit or cashing out is a common practice in any investment. Consequently, there will be a time when a venture capitalist decides to sell or decrease his or her share. This is a multicriteria decision-making problem. The current research focuses on the modeling of the VCs exit process. Based on the findings of the literature review, a basic model is designed. This model is improved through six Delphi rounds. In these rounds, the model is developed based on expert's opinions in three segments. They comprise SME position in its life cycle, SME evaluation criteria and possible exit paths. The final model is approved in the form of a decision tree by more than 90 percent of the respondents. The research results show that buy out is the first strategy chosen by the Iranian VCs. After that, buy in, merger and acquisition, public offering, hybrid and innovative routes and Closedown are respectively the next choices. Additionally, in some situations, it is necessary to restructure the SME. Other strategy could be chosen as a partial exit in order to nominate a new active investor having specialized skills to sit on the board. Based on the findings of the model, a premature exit (e.g. liquidation and bankruptcy) is suggested only when there is no other suitable strategy.