What exit mechanisms can investors use after purchasing equity?

1. Negotiate the exit mechanism in advance and manage the expectations of partners.

Set up the stock withdrawal mechanism in advance, and stipulate at which stage and in what form the partner will return the stock after withdrawing from the company. The equity value of a startup company is earned by all partners' continuous and long-term service to the company. When a partner withdraws from the company, his equity shall be withdrawn in a certain form. On the one hand, it is fairer to other partners who continue to work in the company, on the other hand, it is also convenient for the company's sustained and stable development.

Partners obtain equity based on their long-term optimism about the company's development prospects and their willingness to participate in entrepreneurship for a long time; The small amount of money pieced together by early partners is not the real price of a large number of shares held by partners. The main price of equity is that all partners are bound to the company for a long time (for example, 4 years) and obtain equity through long-term service to the company; If the withdrawal mechanism is not set, it is fair to the partners who quit halfway, but it is the biggest unfairness for other partners who have been involved in entrepreneurship for a long time and have no sense of security for other partners.

2. Shareholders withdraw midway and buy back shares at a premium.

The withdrawal of the partner's share repurchase method can only be achieved through the withdrawal agreed in advance. At the time of withdrawal, the company can buy back the equity in the hands of partners according to the company's valuation at that time, and the repurchase price can be appropriately premium according to the company's valuation at that time.

3. Set a high fine clause.

In order to prevent partners from quitting the company but not agreeing to buy back shares, a clause of high liquidated damages can be set in the shareholders' agreement.