Effective Exit Strategies You Can Consider for Your Business

As ironic as it may sound, exit strategy is an important part of entering a business venture. Exit strategy helps define the purpose and direction of your business that whether it will eventually move toward an acquisition, merger, more funding or liquidation. Without an exit strategy your business may lack purpose and direction, not to mention years of struggle.

Here are common exit plans set up by startups:

Keeping Business in Your Family Traditionally, family businesses have focused on handing down their operations to their children. That's how many local enterprises have stayed in business for over a century. Typically it's a matter of including the business in your will to be inherited by family members. Partnerships and issuing shares are methods to consider when deciding who will be taking over your business.

Keeping Business in Your Family

Liquidation of Assets You can plan a business for a certain amount of time with an exit strategy to sell off assets at a certain point. Many entrepreneurs use this method to move from one business to another by parlaying earnings into new ventures.

Open Market Opportunity A business can be sold on the open market, similar to selling a home. This strategy of advertising your business for sale to the public allows you to accept or reject buyer offers.

Going Public with an IPO Putting a company on the stock market through an Initial Public Offering (IPO) usually only favors large operations with valuable assets. But registration fees and complying with complex regulations such as the Sarbanes-Oxley Act may cause you to consider alternatives.

Selling to a Larger Company Some businesses end up selling to their competitors, supply chain partners or companies with better funding. Strategic mergers and acquisitions usually allow you to make the best possible return on investment. M&As can be facilitated by investment bankers.

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Keating and Lyden

Keating & Lyden LLC was founded by attorneys-at-law, Robert J. Keating, and Thomas P. Lyden and is based in Boulder, Colorado, and Bellingham, Washington. The attorneys specialize in providing legal advice in real estate matters to businesses and individuals pertaining to real estate management and operation including: tenancy in common agreements, partition agreements, real estate financing, homeowner’s associations and land use issues. They also provide the highest quality legal services to small business owners and entrepreneurs.

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