Which strategy focuses on selling a company for more than its initial purchase price?

The strategy that focuses on selling a company for more than its initial purchase price is multiple expansion. This concept refers to the increase in the valuation multiple (such as EV/EBITDA, P/E ratio, etc.) applied to a company's financial metrics when it is sold. If a company is acquired at a certain multiple based on its earnings or cash flow, and then improved operational performance or market conditions lead to a higher valuation multiple at the time of sale, the seller can realize a profit exceeding their initial investment.

This strategy typically requires that the buyer implements operational improvements, enhances market positioning, or achieves growth, resulting in the business becoming more attractive to potential future buyers. Therefore, when the company is ultimately sold, it can command a higher multiple, leading to a successful exit and a higher return on investment.

Other strategies like cash flow management, cost-cutting measures, and market segmentation may improve a company's operational performance or market presence, but they do not directly relate to increasing the sale price through the valuation multiple. Instead, they focus on enhancing the company's profitability or market reach rather than the broader valuation metrics that would influence the multiple at the sale point.