Planning A Business Exit Strategy: What Are Your Options?

A business exit strategy is a plan for how owners of a business will eventually leave. This will outline what happens to the company after the owner has left, the financial plans that are in place, and how the process will impact all interested parties. Having a solid business exit strategy in place in advance of when you plan on leaving, is essential for preventing conflict or financial loss when you do eventually make your departure. There are a number of different exit strategies that you’ll want to consider based on your individual circumstances, whether you’re retiring, moving onto another business venture, or simply looking for a clean break. The main options include:

Selling The Company

If you own all or part of the business, then one of your most financially lucrative options might be to sell. This may involve selling all of the company or a stake of the company, depending on what your shares are. Selling your stake to a partner or investor that you trust, will ensure that the business can continue to thrive and grow, whilst you make a profit from the sale of your shares. 

Family Succession 

Many entrepreneurs want to keep their business in the family. The business may have been passed down for generations previously, or owners may simply consider this to be the best option for handing the company over to someone they trust. Outlining your business exit strategy in advance, will allow you to prepare the family member for the handover and reduce conflict at the time of your exit. 

Mergers & Acquisitions 

A merger or acquisition is another viable business exit strategy. This involves merging with a similar company or being bought by a larger company. The main benefit of this business exit strategy is that it gives owners the ability to negotiate the price of the sale. It also gives you flexibility in terms of your involvement. You could have a clean break from the company or continue to maintain a decreased level of involvement. 

Initial Public Offering (IPO)

An Initial Public Offering (IPO) is a public offering in which shares of a company are sold to investors. The company will be listed on one or more stock exchanges, offering investors the chance to purchase shares. If an IPO is successful it can make you a large profit. However, it is probably the most risky exit business strategy that requires significant time, effort and money without the promise of a financial return. 

Liquidation

Liquidation is a simple and quick business exit strategy. If you would like to close the company down upon your departure, this is the best method for winding up the affairs of the business correctly, whilst extracting funds in the most tax-efficient way. If the company is solvent then you can liquidate assets via a Members Voluntary Liquidation (MVL). If the company is insolvent, you can still enter voluntary liquidation via a Creditors Voluntary Liquidation (CVL). 

If you would like to discuss the option of liquidating your company as a business exit strategy, please don’t hesitate to get in touch with our experienced team at My Liquidation today.