When and how a Fund disinvests
As we have seen an institutional investor partner is temporary, he enters the company's share capital with a forward investment. When and how it depends on the fund itself as well as on the company.
In fact, when it depends on the company's performance: as soon as the company has reached the desired level of development, the value of the investment has increased and the disinvestment is favorable.
If, on the other hand, the operation was unsuccessful, the investor disinvests when it is clear that it is not possible to improve the situation created.
Funds often try to envisage an exit plan, that is, a time horizon in which to disinvest, and of course it is only the company's progress that can confirm this strategy or not.
Divestment can mean the sale of shares to another company or investor or the initial business group, or the company may decide to list on the stock exchange. In this case, given that a minority share of the company can also be placed on the stock exchange, this path allows the investor to sell his stock of shares with profit and the entrepreneur to maintain firm control of the company. We have seen in an earlier article the undoubted advantages of listing.
In any case, the times and methods of disinvestment are defined, as a rule, with the agreement of all the shareholders.
Some final suggestions.
An investor seeks, beyond increasing numbers, entrepreneurs willing to grow and develop their project, as well as being competitive and able to face new challenges.
This kind of attitude can create the foundation for a profitable collaboration, whoever the new member is.