Business People Club

Search All Topics !

What are the Exit Strategies for Businesses?

0 like 0 dislike
464 views
by Octopuppy
How to get out of the business if its not working?

Your comment

Your name to display (optional):
Privacy: Your email address will only be used for sending these notifications.
Anti-spam verification:
To avoid this verification in future, please log in or register.

2 Comments

0 like 0 dislike
commented by Knighttime

Many investors are only interested in investing money into an enterprise for a limited amount of time. They want to know when they will get their money back and what sort of return they will be receiving at that time. Both issues are closely linked. Therefore, when preparing your business plan, to pitch to potential investors, you will need to make sure that you have outlined your long term plans and a sound exit strategy. In order to do this properly you will have to ask yourself a few questions about your own personal plans regarding the business. Do you wish to stay involved in this business in the long run, or are you more interested in getting it off the ground and letting someone else take over then? These are the kinds of questions you should deal with in your exit strategy. You will also want to know a little about the investors you are pitching to and what their expectations are regarding the future of the investment:

  • If you are dealing with venture capitalists you have to be aware that they are looking for a high return. They will generally be expecting the business to go public at the end of the period or make some other high profit move. The period they are willing to invest is about three to seven years so you will need some sort of high return exit strategy at the end of that period. However, you should not opt for going public unless you are confident that it is a realistic goal for your company. Public offerings are very rare for small businesses and the investors you are speaking to will be all too aware of that fact.
  • If you are considering an angel investor then again they will be looking for a high return but will not be overly concerned with the type of exit strategy under consideration, as long as it seems sound. They will be less sophisticated than the venture capitalists or institutional investors you may deal with and are more likely to be involved because of a personal relationship to you or the business.

There are a number of exit strategies you can consider:

  • The most basic exit strategy would be to simply bleed the business dry. This can be done by giving yourself a huge salary or other remuneration, regardless of the performance of the business. While it is not appropriate in most cases, there is no doubt that it can get a lot of your investment back out of the company in a short time.
  • Another simple option is liquidation. Simply close the doors and wait for the company to be wound up. All debts will be paid off, and then whatever is left over will be clear to the shareholders.

While these two options above are quite practical and effective, they are professionally frowned upon and you may wish to propose a more sophisticated exit strategy if you wish to impress potential investors.

  • Another option could be selling to a friendly buyer. While you may have come to the end of your relationship with the business, there may be many people who would be saddened to see it end and may well be willing to step in to take over. This might include passing it on to another member of the family, or selling it to employees or customers. There are many businesses where this will be a realistic option, however it is difficult to predict it at the beginning of the venture.
  • Another option is acquisition. This is when a rival firm, usually one wishing to expand, agrees to buy you out. You can negotiate the price and terms with the buyer and there is a good chance that both of you can come up with a very attractive price. You will get a good price because together with your assets, the buyer will be willing to pay for good will, market share, client contacts etc. This means you can get a very good price for the business.
  • The IPOs that we previously talked about are the final option. These are potentially the most lucrative of all, but when reality kicks in, they might not seem like the dream you thought they were. In reality, a minuscule percent of companies manage to make it through an IPO. The process costs millions, includes lawyers, analysts, publicity agents and a lot of other costly professionals. The odds are against you ever making it. And if you do, you will probably be left with only a fraction share of the company you used to own.
0 like 0 dislike
commented by anonymous
That is good article. Thanks for sharing.

Related posts

0 like 0 dislike
1 Comment 255 views
What are the advantages of outsourcing?

What are the advantages of outsourcing?

by BumblingBee
0 like 0 dislike
0 comments 185 views
Business systems – what are they?

You may have heard about them before, but never quite thought about how they can help you personally. They seem to be an ambiguous element ... , in exactly the same way, for many more years to come.

by Sassassin
0 like 0 dislike
0 comments 211 views
What to Look For in a New Franchise

Want to buy a franchise opportunity? Great idea! Here is a high-level overview on what to look for: Operating History - A ... of re-sales relative to the total number of franchises in existence.

by HairySeahorse
0 like 0 dislike
1 Comment 313 views
What to look for when working with a partner?

What to look for when working with a partner?

by GraveGrass
0 like 0 dislike
1 Comment 249 views
What to look for when Outsourcing projects offshore?

What to look for when Outsourcing projects offshore?

by Tomatoad
0 like 0 dislike
0 comments 1,138 views
Equipments necessary for starting a business in the production of labels

The labels cover a large range of products for which they are destined, and this determines the existence of several types of label ... must be chosen according to the target market that we refer to.

by FatKomodoDragon
0 like 0 dislike
0 comments 1,015 views
Business Documenting - The must for all companies

Surprisingly many businesses fail to create such an essential item; the reality is that these types of businesses and ... Greater efficiency ultimately leads to the business becoming more profitable.

image
by BeautifulWolf
0 like 0 dislike
1 Comment 295 views
0 like 0 dislike
1 Comment 263 views
What are the Effective Niche Marketing Strategies?

What are the Effective Niche Marketing Strategies?

by Herogue
0 like 0 dislike
1 Comment 223 views
What are the sales boosting strategies?

What are the sales boosting strategies?

by Butcherry
0 like 0 dislike
1 Comment 200 views
What are the low cost home based businesses?

What are the low cost home based businesses?

by Prepatriarch
0 like 0 dislike
1 Comment 223 views
0 like 0 dislike
0 comments 1,257 views
What are the Benefits of Business Loan?

Finance is always a main issue, when it comes to start a new business. You can have various innovative ideas and plans, but you ... a new business loan, to avoid any sort of perplexity in future.

image
by VoyageHooper
0 like 0 dislike
1 Comment 293 views
What are the crazy money making ideas?

What are the crazy money making ideas?

by KeyboardPie
0 like 0 dislike
0 comments 1,000 views
What are the business start up costs?

If you are considering starting your own business, then you have no doubt considered the investment required for various business start-up ... sites that can help you get your business up and running!

image
by AfternoonFay
0 like 0 dislike
0 comments 238 views
Key Employees can and will leave your Business, are you prepared?

Very few businesses can claim to be prepared for the loss of key employees. Quite often it is an unexpected and unplanned for ... of the problems that occur when key employees leave your business.

image
by nicejone
0 like 0 dislike
1 Comment 250 views
Are Business Consulting Companies Worth Your Time And Money?

Are Business Consulting Companies Worth Your Time And Money?

by TrustyKitty
0 like 0 dislike
0 comments 226 views
Process Analytical Technology: What Is It?

Process Analytical Technology is a system for designing, analyzing and controlling manufacturing processes through timely measurement during ... , then a process is generally called well understood.

image
by HairyFoal
0 like 0 dislike
1 Comment 242 views
What should i know about A Retail Merchant Account?

What should i know about A Retail Merchant Account?

by HarmlessRose
0 like 0 dislike
0 comments 219 views
4 Instant Tips for Running a Successful Internet Business

Running an internet business is not a difficult task; but running a successful internet business can be a bit more difficult. There ... business, but to be successful you will have to be determined.

image
by AfternoonFay
0 like 0 dislike
0 comments 236 views
6 Tips for Keeping Your Cool When Customers Get Hot

1. Be assertive - not aggressive or passive. My definition of assertion is simple: "Say what you mean, mean what you say, and ... tips will position you to keep your cool when customers get hot!

image
by Slayerk
0 like 0 dislike
0 comments 192 views
9 Marketing Credos for a Thriving Business

1. Differentiate or Die! You Must Stand Out From the Pack. Don't become another me too option for your prospects to choose ... for you. © 2005 Online Marketing Muscle -- All Rights Reserved.

image
by Octopixy
0 like 0 dislike
0 comments 254 views
7 Ways To Advertise Your Business For Free

. Free directories: directories are perfect for customers that are searching for a particular topic. What's great about them is ... for a recipe swapping group when you are advertising shaving cream.

image
by ShowDolphin
0 like 0 dislike
0 comments 207 views
Five Steps to Create a Budget for your Small Business

How I hate budgets! Every time an accountant told me to put together a budget for my company, my response was - When ... Have systems in place to increase revenue and decrease expenses as necessary.

by UncleRhino
0 like 0 dislike
0 comments 484 views
Ideas For New Products And Inventions

How many new products and inventions can you dream up with in thirty minutes? At least a few if you know the techniques of ... also thousands of other new products and inventions waiting to be made.

by HarshThunder
0 like 0 dislike
0 comments 225 views
Incorporation Is It Right For My Business?

For anyone starting up his or her own business, an understanding of business incorporation is must. While there are both ... informed decision about whether incorporation is right for your business.

by HairySeahorse
0 like 0 dislike
0 comments 235 views
3 Key Secret Components For Wholesale Profit Success

Everyday it is getting more attractive to start selling wholesale items online and offline because of the profit potential many ... and potential profit success within your niche and industry.

image
by MammothMoth
0 like 0 dislike
0 comments 318 views
Guidelines for Sending Business Christmas Cards

Whether you own a sole proprietorship or are the CEO of a Fortune 500 corporation, sending business Christmas cards can serve to boost your ... who have a sent a card to you and see it displayed.

by TwinNut
0 like 0 dislike
0 comments 397 views
Franchises For Sale - To Buy Or Not To Buy

Franchising is a business model where a franchisee gets the permission start a branch that uses the name and methods of the franchisor in ... not own the branch, you may have to exert more afterwards.

by GreedySmile
0 like 0 dislike
1 Comment 341 views
How to find a Restaurant Equipment Supplier Crucial for New Restaurant Owners ?

How to find a Restaurant Equipment Supplier Crucial for New Restaurant Owners ?

by PlushSeal
0 like 0 dislike
1 Comment 246 views
How to Choose A Name For Your Company That Makes Sense ?

How to Choose A Name For Your Company That Makes Sense ?

by SilkPredator
0 like 0 dislike
1 Comment 291 views
0 like 0 dislike
1 Comment 1,078 views
How to look for business opportunities?

How to look for business opportunities?

by TrainedGuy
0 like 0 dislike
1 Comment 227 views
4 tech must-haves for your mobile office

4 tech must-haves for your mobile office

by TwinNut
0 like 0 dislike
0 comments 1,196 views
The Importance of Call Centre Staff

Most businesses invest fortunes in any way they think will make their company thrive, from advertising and brand management to ... more money, and be treated with more respect, elsewhere.

by Knighthawk
0 like 0 dislike
0 comments 326 views
10 Ways To Ensure Your Flyer Avoids The Bin

Flyers are an excellent marketing tool to promote a club night or event. They are commonly used for student promotions throughout the country. You ... wonders. 10. Er, try not to stand near a bin.

image
by BeautifulWolf
0 like 0 dislike
0 comments 521 views
8 Great Interview questions to help you find the right Candidate

1) Do you have written goals you want to accomplish and if so, tell me about them? You are looking for indications of maturity, ... you're ready to take the next step with this person. Good luck

by BumblingBee
0 like 0 dislike
0 comments 269 views
The Importance Of Business Plan

Do you need more money to expand your business? If yes, you need a business plan. If you are starting a business, despite the ... Make it a priority to have this crucial road map for your business.

by MammothMoth
0 like 0 dislike
0 comments 1,196 views
The Benefits of Business Improvement Programs

By attending to an effective, well-structured Business Improvement Program (BIP), business owners are able to learn elaborate, ... rapidly enhance the efficiency and the prosperity of your business.

by OpinionOwl
0 like 0 dislike
0 comments 1,155 views
Who Has The Largest Retail Location In The World? The Internet, That's Who!

We often hear about the many thousands of locations where you can find a Wal-Mart, or a Target, or even the remaining K-Marts. ... can do it all without leaving the comfort of your home or office.

by ForceSoldier
0 like 0 dislike
0 comments 1,023 views
The Internet is Used 24/7, But Timing Still Matters

With so much information on the net regarding Internet marketing, identifying the best approach is difficult. Following is a discussion of ... and you can will see an upward trend in your revenues.

by VirtualAssassin
0 like 0 dislike
0 comments 1,136 views
The changing face of self made business

How does young, dresses casually, rich sound to you? Even to a casual observer it is perfectly clear that today's entrepreneurial ... online doesn't get any simpler nor easier , said Ben Lloyd.

by Madept
0 like 0 dislike
0 comments 1,292 views
The Basics Of Business Incorporation

If you are a business owner, even if it is a small business, you want to be successful. You are undoubtedly aware of the work it ... , and it is not nearly as complicated as it might sound to you.

by Conjursa
0 like 0 dislike
0 comments 298 views
The Power of Joint Venture

What is a joint venture? Although it is the key to increase your profit and your time off (you sell while you are doing ... . Remember: other people is the way to succeed in your business.

by GreedyPig
0 like 0 dislike
0 comments 240 views
Reasons Why Information Is The Greatest Commodity In The World

There are so many reasons why information is the greatest commodity in the world. Information helps people. It spreads the knowledge of ... or offline, you can earn income and even make a living.

by Octopuppy
Quick Guides

1,098 posts

604 comments

1 comment

74,518 users

Connect with us:
...