Ever heard of strategies for exiting business after operating for some time? Nobody plans to startup a business and then fold up at a point in the business’ life cycle. However, the reality of exiting the operation of a business using several different options available hits every business and business owner at one point or the other. Businesses go through different stages from startup to decline and different situations where they experience several changes in metrics and operations.
It is expedient for every business owner to have a business succession or exit plan while planning the success and profitability of a business. Whether it is to run the business as a family or sell it off using the different and appropriate strategies, a business owner should plan the future of the business while building it. Knowing the future of the business and the exit strategy helps business owners to make decisions that suit their chosen future path of the business while running the business.
Several exit strategies are available for business owners to choose from depending on their objectives including mergers and acquisitions, Initial Public Offerings (IPOs), family business succession, outright or partial sales to an investor or partner, liquidation and management and employee buyouts among others.
Mergers happen when two companies decide to pull resources together and become one while acquisitions involve a company buying out another company. IPOs happen when a company decides to go public, that is, change from being a privately owned company to a public company and hence float shares as stock for shareholder investments. Family businesses are built to be kept running from generation to generation with most of the business operations run by the members of that family. Outright or partial sales is when a business owner sells the entire or part of the business to an interested investor and liquidation happens when a business is closed down with all of its assets sold to defray debts. Management and employee buyouts occur when the business is handed over to existing employees of a company to run.
All the above-mentioned business exit strategies have various pros and cons and business owners should strive to know these pros and cons before choosing any of the strategies. It is better to plan for circumstances that may come up and force the exit of a business rather than wait for them to occur before trying to find solutions.
What business exit strategy are you adopting for your business today?