Formulating a Business Exit Strategy: What Are Your Options?

Formulating a Business Exit Strategy: What Are Your Options?
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You Need a Plan

Everything that begins must come to an end – that’s a fact of life. And the business world is no exception! The business losing grounds may be just one of the reasons why you may have to walk your business out the exit door. Disputes among partners, inability to run the business anymore, shifting to a different business, retiring from work or earning more than what the business currently earns are some of the other possible reasons to plan an exit.

Whatever be the reason for shutting down the business, a prudent entrepreneur will never wait until the final day to decide on a business exit strategy. In fact, many startups have their exit plan as a part of the initial business plan. Having an exit strategy at the very start of a business is often ridiculed and equated with pessimism, but in truth, it’s more about being practical. So, leave aside all your arguments and revise your business exit plan before it’s too late.

How to Step Away


Liquidation Sale

The easiest and the simplest way to wind up you business is to put everything the business owns on sale. This could take weeks to months, the negotiations can be painful and you may not feel proud of the amount you recover, but it still isn’t a bad option. You can use proceeds to help pay off any existing debts.


Even if you’ve failed miserably in making your business succeed, there may still be investors who would be willing to buy your business for a decent price. Finding good buyers and negotiating a good price can be a bit of trouble. Getting the business valued is another tricky part, but a good sale price will make it more attractive. And, in case your business is running smoothly and successfully, you’re sure to find some great buyout deals.

Squeeze it Dry

If you’ve planned a year or two in advance, that you have to wind up your business, then you can squeeze out the finances by drawing a bigger personal salary or just paying yourself some generous bonuses. However, remember to leave enough money in the business to pay off all the existing debts. When you’ve pulled out your share and paid off the debts, the remaining business assets can be put up for sale. The only problem with this strategy is that you’ll have an additional tax burden with the increased personal earnings. But, if managed wisely the tax paid can be much lower than what you would have to pay in case of an outright sale.

Acquisitions and Takeovers

If there are bigger fish in your line of trade, chances of getting good acquisition or takeover offers are excellent. Prove your company’s worth and its future potential, and the sky is the limit for the offers you can receive. The more attractive your business looks to the acquire, the higher will be the price it fetches. For this you may have to do a bit of work and realign your business to mesh perfectly with the interests of the potential buyer. This would mean some real additional efforts before you finally make an exit. Pull in some more interested parties into the game, and the bidding will get you much more than what your business is worth.


If you’re not willing to completely let go your business, merging it with some other company is the best way to exit. You’re not likely to earn cash with a merger, but the problems you’re facing in running the business can be scrunched to a more manageable level. If you’re merging up with a bigger company you’ll benefit from the stocks you receive in that company. You can also opt to play a sleeping or an advisory role, and just keep earning while the other party runs the business after the merger.

Apart from these options, selling your companies stocks at the stock market and turning it into a public company can be a business exit strategy option for some. However, only a lucky few can get past the exorbitant initial costs and the strategic ransacking that precede the public offer.


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