How to plan the perfect exit strategy
If you own a business, or you own shares in someone else’s business, it’s likely that at some point you’ve considered how and when you’ll sell up and move on to your next project. The exit strategy process can take many forms, and it can be difficult to figure out which option is right for you. Take a look at our guide to some of the exit strategies available for you.
What is an exit strategy?
An exit strategy is a plan to sell your ownership in a company to other investors, another company, or relevant stakeholders. This applies if you are the owner of a business, or you simply own a number of shares in a company following investment. The key idea of exiting a business is to make money, but there is a range of other benefits too, such as giving you enough time to pursue other projects or allowing you to get rid of a conflict of interest with another investment.
Types of exit strategies
There is a whole range of different potential business exit strategy templates, and the most suitable option will depend on the business, your involvement, or the unique circumstances you face. Take a look at some potential exit strategies below.
Exit strategy for startups
If you’ve experienced considerable success with your startup, you may wish to consider an exit strategy to make the most of your valuation. Consider approaching competitors who may wish to acquire your business, technology or customers, or alternatively, any current investors in your company may wish to buy you out. If you’re looking to exit due to financial difficulties, liquidation may be your best option to pay off debts and maximise the value of your assets.
Exit strategies for small business
If you own a small business, there are a number of exit options available for you. You may wish to sell your business on the open market, for which you’ll have to determine the value of your business. You could also sell to the managers or employees of your business if they’re willing to take on the running responsibilities of the business.
Alternatively, if you have larger competitors, they may wish to acquire your business and take on your customer base.
Family business exit strategies
For family businesses, succession planning is key to ensure effective management as older members of the family exit the business. A key benefit of succession planning is that the business stays in the family, which can help to make sure the key values of the company are not lost, and that customers retain their bond and connections to the business. You may sell your shares in your business to relatives, or pass these on by restructuring.
Exit strategy for investors
If you’ve invested in a small business, and as a result own a number of shares, you may want to sell these for a profit that reflects the business’ growth. You may be able to sell your shares back to the owner of the company, which will allow them to retain a greater percentage of their business, or you may wish to sell on to other investors who are able to support the business going forward.
Other exit strategy examples
These exit strategies are certainly not an exhaustive list. From liquidation to IPOs, there is a range of other tax efficient exit strategies to explore. Speak to a professional advisor to find out what options are available to you.
How to create a business exit strategy
Choosing and actioning an exit strategy can be a time-intensive process with many steps. It’s always key to get professional advice before making any decisions, to ensure you’re complying with laws and legislation, paying the correct amount of tax, and maximising your profits.
Our accountants have a wide range of experience, including family business management, corporate finance, and tax accountancy. Our breadth of knowledge and years of experience will help to make sure that you make the best decision. Get in touch with us today to find out more about how we can help you.