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A business exit strategy is an entrepreneur's strategic plan to sell his or her ownership in a company to
investors or another company. An exit strategy gives a business owner a way to reduce or liquidate
his/her stake in a business and, if the business is successful, make a substantial profit.
Having an exit strategy worked out in advance helps ensure that you like the answers to those questions
and gives you some control over your small business's future.
Here are seven exit strategies for small businesses to choose from:
This is the close up shop and sell all the assets exit strategy. For small businesses, especially those that
are dependent on the performance of a single individual, liquidation is sometimes the only option as
there's really nothing else to sell. If you're in this position, you may want to spend some time retooling
your business so that it could be operated by someone else – making it a business someone might want to buy.
2) Liquidation Over Time
In this exit strategy scenario, the owner(s) extracts most or all of the profits out of the business over time (before eventually selling or closing the
business), rather than reinvesting them in the company for expansion. This is typically done by taking out large salary draws or dividends over a
number of years before eventually winding up the business, and is suitable for the owner(s) who wish to maximize their current lifestyle rather than
aggressively expand their business.
3) Keep Your Business in the Family
The dream of many small business owners, keeping your business in the family ensures that your legacy lives on and provides a living for your heirs.
4) Sell Your Business to Managers and/or Employees
Current employees and/or managers may be interested in buying your business.
5) Sell the Business in the Open Market
This is the most popular exit strategy option for small businesses. At a certain point in time, often when he or she is ready to retire, the small
business owner puts the business up for sale for a certain price — and hopefully walks away with the amount of money she wanted to get for it.
6) Sell to Another Business
Positioning your small business to be a desirable acquisition can be very profitable. Businesses buy other businesses for all kinds of reasons, such
as using a new acquisition as a quick path to expansion, realizing synergies from complementary business activities, or simply buying out (and
getting rid of) the competition.
7) The IPO (Initial Public Offering)
While not suitable for all small businesses, the IPO can be a viable exit strategy.
|Whichever exit strategy you choose, we can help!
Planning in advance gives you the time to do it right – and maximize your returns.