When Michael Birch launched teen social networking sensation Bebo back in 2005, there was no way he could have foreseen the goldmine he had on his hands. Having started out in cockroach-infested apartments (" they were fun for the kids to chase around," he later reasoned) and launched a series of reasonably successful websites, Bebo quickly became a runaway success, swiftly climbing to second position in overall UK site rankings with 22 million registered members.
It was at the peak of the Bebo -and social networking - frenzy that entertainment giant AOL Time Warner (now just AOL) approached Birch and his wife, Xochi, for a sale. While the $580m (£333m) sale of MySpace to News Corp three years previously had sent the value of its rivals soaring, Facebook had yet to match Bebo's traffic levels in Europe. With these factors added up, the pair sealed the deal with AOL at a very cool $850m (£420m) in April 2008.
Since the sale, Bebo's value has fallen along with its popularity. Competition from the likes of Twitter and the increasing functionality of Facebook, which has stayed in its founder's hands since its inception in 2004, have combined to devastate their rivals.
During an event in London back in July, a member of the audience asked Birch when the best time to sell a technology business is likely to be. Birch stifled a laugh: "When is the best time to sell a web business? Last April!" he smirked.
Lesson: Time your exit to coincide with the peak of your popularity.
On April 4 2008, entrepreneurs attempting to sell their businesses awoke to a frustrating deadline: the capital gains tax (CGT) rise was due to take place the next day. The rise, which had been deferred twice since its announcement by then-chancellor Gordon Brown during 2007's Budget speech and had been contested by business lobby groups up and down the country ever since, could no longer be put off.
One entrepreneur who wasn't worried, though, was Dreams founder Mike Clare. Having established his bed retailer in 1985, Clare had built his business up to a 150-strong chain, taking more than £15m in profits in 2008 - and had managed to seal a £230m sale of the business to private equity group Exponent weeks before the new tax came in.
Clare's move was a shrewd one - while he probably lowered the sale price by rushing the sale through (it was expected to close at £250m), he had saved himself more than £18m in lost earnings from the deal - prompting plenty of cheesy 'sweet Dreams' headlines.
Lesson: Beat the tax man.
Say what you like about the estate agent's unscrupulous reputation, but when Foxtons founder Jon Hunt bagged £370m for his stake in the business in May 2007, he made one of the most serendipitously-timed exits of the recession.
Fast forward six months, and commentators were already hailing the beginning of the property market crash. Another six months, and the crash had begun in earnest: house prices peaked in September 2007 and started their downward slide from there - along with Foxtons' profit margins.
While a photograph of the company's characteristic Minis lined up idly along a kerb was rapidly becoming one of the defining images of the recession, it was rumoured Hunt was cashing in by buying up property in Knightsbridge. "The time to start buying again," he reportedly advised wannabe property developers, "is when there's blood on the street, but it's drying."
Lesson: Watch your market and make your exit ahead of a crash.
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