Is your business in need of an exit plan? If so, there are different options you can explore, but each one comes with its own pros and cons. And, ultimately, what will work best for your company depends on what your long-term business vision is.
So, what is a business exit strategy?
To put it simply, a business exit strategy is a way you go about leaving your business. It’s similar to a standard business plan, except that it demonstrates what to do when your business comes to a conclusion.
Despite what the name may suggest, a business exit strategy doesn’t indicate the collapse or failure of a business, or even that imminent action must be taken. In fact, many business owners create these strategic plans simply because they have no interest in being involved in their business past a certain time.
People pursue business exit strategies for a variety of reasons. Sometimes, it’s because of health problems, other times it’s because they want to explore other business ventures. Either way, a business exit strategy can often be the best move from you, whether you want to sell your 9 figure business for profit or take personal time for other things.
5 potential strategies for your startups’ exit plan
From acquisitions to mergers, there are many strategic ways to approach a business exit. Here are the 5 major strategy options to consider before you decide on your exit plan.
1. Sell to a partner or investor
Are you not the sole proprietor of your business? If not, you have the option to potentially sell your stake to a business partner or investor. With this option, you can leave the business as usual, and know things will be okay once you leave.
2. Management or employee buyout
Another option is to have your management or employees buy out the company from you. Employee buyouts work if you have a team that knows how to manage your business and has a long-term vision of how to grow the company. This solution often leads to a smoother transition and can increase loyalty amongst your employee base.
3. Explore an IPO
With an IPO or initial public offering, you actually sell your business to the public. This option is trickier than some of the others, especially considering that the public may not respond to your business the way you’d want it to. That could lead to the devaluation of your company.
On the bright side, IPOs can be quite lucrative. They’re under more scrutiny from analysts and stakeholders though, which can be stressful, so it’s good to really think this option through before settling on it.
4. Liquidate your business
Are you ready to close shop on your business? Well, then you could liquidate your business and sell your assets. What’s great about this strategy is that it means you can fully walk away from your business venture without having to worry about its future.
If you decide to go through this route, keep in mind you’ll have to use your profits to pay off stakeholders and any debts you may have.
5. Go the merger or acquisition routes
In these scenarios, you either sell your business or merge it with another company that is similar to yours. The flexibility of your involvement post-sale will differ depending on who you want to merge with or sell to. What’s nice about this option, however, is you can negotiate the price of your sell, which you can’t do if you go public.
Ready to make moves?
It’s okay to want to move on from your business and explore other opportunities. Simply follow these exit plan tips and you can pick the best exit strategy for you.
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