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Choosing the Right Business Exit Strategy

A business exit strategy is a business owner’s plan to sell their investment in their company in order to either make a profit or limit losses, depending on the level of success of the business. A good entrepreneur will have already conceived their particular exit strategy and defined it in their business plan. This is because an exit plan may play a significant role in choices regarding business development. Business owners may choose from the following exit strategies and more:

 

  • Initial Public Offerings (IPOs) – An IPO is when a private company’s stock is made available to the public for the first time. This particular exit strategy is geared more toward smaller companies because they’re more likely to not offer stock and because of how few IPOs are successfully executed in one year in the U.S.
  • Mergers and Acquisitions (M&A) – You may choose to sell to a buyer who wants to purchase the company for a specific reason, most often because they find that your company will make a good fit with their other existing business(es).
  • Management Buyout – This occurs when the current owner of a business decides to sell the company to his/her managers. This way, the managers are able to reap the rewards of owning a business, instead of just being employees. This is typical among larger corporations because of the exorbitant cost of purchasing a company.
  • Liquidation and close – This is a fairly simple exit strategy in which the owner decides to close up shop, so-to-speak, and sell everything to make a profit.

 

Whichever strategy you choose, it should be well thought-out and defined in your business plan. You should always consider how your exit strategy might affect your business decisions, and plan accordingly.

About Mike Sperling

Mike is the Founder and Director of Sperling Interactive. Mike’s keen eye for photography, extensive technology skills and innovative marketing ideas make Mike a leader in the website design and management field. He is proficient in html, css, php, javascript, MySQL and the Adobe Design Suite. Before founding Sperling Interactive, Mike worked his way up from staff photographer at the Eagle Tribune Publishing Company to the lead operator and manager of multiple websites for daily and weekly publications. Known as the “media guru”, Mike gathered years of experience before making the leap to start his own business. He graduated from Rochester Institute of Technology with a BFA in Photojournalism and a minor in Mass Communications. When Mike is not meeting with clients or designing new websites he enjoys spending time with his wife, Jodi, daughter Zoey, and son Camden. Mike enjoys hiking, geocaching, traveling, movies, the Baltimore Orioles & Ravens.