What's Your Company's Exit Strategy?

Has your company reached the tipping point? Businesses have their ups and down, and it is not uncommon for business owners to feel that they must take steps toward an exit strategy. There is more than one way to make an exit. Whether you sell the business, merge with a larger company, or sell shares of the company to the public, all of these exit strategies have their pros and cons.

Selling the Business

Selling the business outright can be a lucrative way to make a grand exit. If you have alternative sources of income, other business ventures, or another job lined up with a different company, this may be the perfect solution for you. Unfortunately, the current economic conditions might not make for as grand of an exit as you, the business owner, may have hoped. If your livelihood is completely dependent on the income your business generates, selling outright might not be the wisest exit strategy in a recession. However, once the economy rebounds, you may be able to sell your business at a price that is 3 to 5 times that of your annual income.

Mergers and Acquisitions

Mergers and acquisitions are great for positioning your company for diversification and growth. A larger company with additional resources and more man power may offer you unique opportunities for professional development and a chance to keep your entrepreneurial spirit alive. If you want to stay in business, but you know your organization cannot make progress alone, then a merger or acquisition might be just right for you. The downside to mergers and acquisitions is that you must make sure that you are able and willing to work with the partner organization. Explore their company values and practices to see if they align with those of your business.

Initial Public Offering (IPO)

An IPO is extremely effective strategy for raising capital and positioning your company to grow in remarkable ways. When successful, an IPO might provide you with the cash flow and leverage that you need to take your organization to a new level. This is a good solution if you are not satisfied with the current state of your company, and you are dedicated enough to initiate and implement change. However, IPOs are risky. They are not for the faint of heart. They are also not for business owners who are not ready to engage in a long period of transition and growth. The downside of IPOs is that they require a relatively high degree of risk taking.

No matter what exit strategy you choose for your company, it is important to weigh the pros and cons carefully before making a decision. Perform research and make comparisons to companies that are similar in size and profitability to get a realistic picture of your ideal exit strategy.

Like this? Share it with your network:

I need help with:

Got a Question?

Get personalized expert answers to your business questions – free.

Affiliate Disclosure: This post may contain affiliate links, meaning we get a commission if you decide to purchase something using one of our links at no extra cost to you.