So you've built yourself a company from scratch and now you're considering your exit options. As an ambitious and passionate entrepreneur you won't necessarily want to simply sell to the highest bidder, so it's important to weigh up the pros and cons of each exit strategy before you take the plunge.
Below we've explored five of the most common exit strategies, including their main advantages and disadvantages.
Merger & Acquisition (M&A)
This traditional exit option often simply refers to merging with a similar company or being purchased by a larger company. This strategy can be beneficial for both parties, offering the seller the chance to sell their beloved firm to a business with the right skills to take it the next level, whilst also giving the buyer the chance to expand their company or group via a successful startup.
As a startup it's likely you have many ambitious and able employees working within your firm. When looking to exit your company, remember that they may wish to take the helm and use their own ideas to push the business even further, with a solid knowledge of the firm as a foundation. This prior knowledge can even help to ensure the transition is smoother than it would be, should an outside party make the purchase, and could allow for greater flexibility during the sales and handover process.
Initial public offering IPO
Selling your business to the public is a risky strategy that could deliver great rewards as long as you meet the right requirements. Specifically, your company will need to be within an appealing industry and will also need to be highly successful and appealing to the public itself. If you fail to meet these criteria you may find that buyers are not excited enough to purchase stocks, which can leave you facing scrutiny and financial difficulties.
A simple sale
Unlike M&A, a normal sale can be to anyone, regardless of whether or not they already have a business or industry experience. If you find the right person, you could benefit from a clean and easy break with a swift pay off. However, this approach can be risky if you don't do your research - you could end up with the wrong person running your business and undoing all of your hard work. Ideally, you should track down an individual with experience running or owning a business, as well as innovative ideas that will help your much-nurtured company continue to thrive.
Although it may not feel like the ideal option, liquidation (the closing of your business and sale of your assets) could be the best option for you and your company. The downside of this strategy is that it will result in the closing of your startup and leave you liable to pay off any debts or shareholders. However, you will no longer have to worry about the business, leaving you free to walk away and begin your next business venture with no ties or debts.