Exit ? You haven't even entered yet !

In his witty article, which was published in the 2002 yearbook of the Hungarian Venture Capital Association, Toby Mansel – Pleydell, the ConCorde Aquila manager partner is analysing the exit strategy, one of the most important guidelines of venture capital investors.

Stock option plans

If “location, location, location” is a property developer’s mantra, venture capitalists would surely place equal emphasis on the role of management. Thus, in structuring a transaction, venture capitalists need to ensure that gifted managers remain in place and are incentivized to build shareholder value once the investment is completed. Investors employ a combination of punitive and reward measures to achieve this end.

The process of attracting investors

Hungarians are thought to be innovative people with good ideas, yet entrepreneurs often find obtaining capital difficult. Analysing certain reasons of this paradox, this article concentrates on the investment process from the entrepreneur’s point of wiew, and highlights certain key, although often neglected aspects.

Protection of the minority rights

The parties to short to medium term equity related arrangements, such as venture capital deals, will often negotiate provisions dealing with their exit strategy. In order to create an opportunity for the sale of all shares int he target company on an exit and in order to be able to protect the interests of both the majority and the minority parties, so-called „drag-along” and „tag-along rights” are often used.