One of the first questions investors ask of a company is, “What’s your Exit Strategy?”
In other words, when are you going to go public or sell your company to a larger company so I can cash out with 10 times my original investment?
With a conventional profit-driven company, this might not be a big deal for consumers, workers, or suppliers. For companies primarily with a social mission, however, it means the end of the mission. But you can’t get that investment money without having a plan to sell out – call it the Exit Strategy Trap.
We’ve seen it over and over among companies that were once our peers in driving change in food and consumer products. (Dr. Phil Howard has put together an excellent graphic of the consolidation of the organics industry. Join us on Oct. 24 for a webinar on this topic with Dr. Howard.) Despite the rosy statements when big piles of cash are being exchanged, once the mission-driven company becomes a cog in the machine, it ceases to be an agent of change.
How did Equal Exchange avoid this Exit Strategy trap? It’s not because we don’t get offers.
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