I have an idea in global commerce area and I am trying to develop it to a software product.
I shared my thoughts with several experts and got their positive feedback.
Currently, I am working on a business plan and my question is:
Assuming that the plan B (more realistic than the IPO) is exit and I target 3 big SW companies that shares the ERP market, how do I plan the exit\exit strategy?
What are the critical points I must consider?
Any tips would be appreciated.
You're wasting valuable resources now thinking about the exit plan. You don't even have a product yet. Your time would be better spent focusing on building a business first. Otherwise you're just day dreaming now.
I'd look at it from the point of view of the companies who might buy you out in x years time. They either want to do one of two things:
(1) is quite a negative way to approach it and companies often just try to increase their competition rather than buy you out. That said if you bring them a lot of useful customers paying annual maintenance, that helps.
(2) tends to be the better route to go down. Think about what extensions to their current markets there are. They should be niche currently, but you should target those that should grow into useful market volumes. Look by vertical domains (specific industry extensions to the ERP), by countries, by business size, etc.
One thing to remember with either exit is that they will need to integrate your technology and customers with their technology. Think about this from the start. What technologies do your selected companies use? Are you able to integrate with their storage formats, including import/export?
Import is critical for grabbing customers from them, export is critical for a buy-out, it gives that company an easy way to bring your customers over. Think about a very clear XML storage format and use standards wherever possible.
Focusing on an exit and on making yourself attractive to competition is likely to cause you to miss the boat on making a product and business that users want. As others have said - this is the wrong priority and wrong focus.
You can think about it, but don't make plans for any of it. None of it is likely to happen - most plans get blown out of the water within a few months, much less last years.
Mention possible exits in a business plan, but to really have any hope you need to have a compelling product, not a compelling business plan with imaginary exits.