85 - Start with the Exit Strategy Before Investing into Emerging Markets
A great investment means nothing if you can’t exit. Emerging markets often lack liquidity, making exits a challenge. Learn how top investors plan their exit strategy before investing, ensuring strong returns through acquirers, IPOs, or secondary markets.
Start with the Exit Strategy Before Investing into Emerging Markets
Investing isn’t just about where you put your money—it’s about how you get it back. In emerging markets, many investors focus on finding the next big opportunity but fail to ask a crucial question: How do I exit?
The Liquidity Challenge in Emerging Markets
Unlike developed markets, where investors have access to deep capital markets, emerging markets often lack reliable exit options. Some key challenges include:
• Limited acquirers – Fewer established companies looking to buy out startups.
• Weak public markets – Local stock exchanges may not support IPOs at scale.
• Scarcity of secondary investors – Fewer buyers for early-stage investors seeking to exit.
How the Best Investors Plan Their Exit First
Before making an investment, experienced investors map out multiple exit scenarios, including:
• Strategic Acquisitions – Is there a clear buyer for this company in the future?
• IPO Potential – Can this business go public locally or internationally?
• Secondary Market Liquidity – Are there investors willing to buy out early shareholders?
Final Thought
A great investment is only valuable if you can realize your returns. Before you invest, map out your exit. If you don’t see a clear path, rethink the opportunity.
Listen to this episode of Pattern Cognition to learn how smart investors ensure profitable exits.
Highlights:
00:00 Introduction to Due Diligence in Emerging Markets
00:04 Importance of Exit Strategy
00:13 Challenges in Liquidity
00:27 Planning Your Exit
00:34 Reevaluating Entry Without Exit Path
Links:
Website: https://www.sidmofya.com/
LinkedIn: https://www.linkedin.com/in/sidmofya/
Transcript:
Five key due diligence checks for investing in emerging markets. Number five, exit strategy. How do you get your money out? You haven't made a good investment. Until you've made a good exit. In emerging markets, liquidity is often the biggest challenge for investors. Are there active acquirers? Can this company list on a local or international exchange?
Do secondary investors exist? Often the answer is no or close to no. So the best emerging markets investors plan their exits and their exit scenarios before they even write the first check. If you don't see an exit path, rethink the entry.