Benefits of an exit strategy:
Like estate planning, devising a strategic exit ensures you’ll protect your spouse or heirs from engaging in unnecessary decision-making & tax burdens by handling these things before they have to.
Practically speaking, you want to maximize the value of the wealth your business can afford you, beyond your annual salary. Maybe the goal is a lump sum that will buy a vacation home in Palm Springs; maybe it’s an annual dividend that simply allows you to live without worry. Either way, it’s important to consider your own financial goals here—after all, you’re the one who built the business.
Your employees and Board of Directors will likely work hard to help you achieve your exit goals, and it is in the best interest of everyone to facilitate a smooth business transition. If you plan ahead thoughtfully, you can create certainty and stability during the business transition.
Maximizing value & growth potential:
Whether you’re eyeing a $20M acquisition or just looking to grow aggressively, implementing tangible steps to ensure your financials and cash flow forecasting are sound will improve your outcomes.
Types of Exit Strategies
Mergers & Acquisitions
This is the most common exit strategy. M&A benefits investors, founders, and equity-holding employees by offering a direct return on investment in a lump sum. Mergers and acquisitions consulting can help your company achieve the maximum acquisition value for your exit.
Initial Public Offering
An IPO means transitioning from a privately-held company to a publicly traded one. You’ll work with a bank to set the value of your company’s shares, and then hope that the market drives the value up even further. IPOs have strict SEC requirements that accompany the process and accurate financial are essential to gaining SEC approval for your IPO.
Typically, liquidation is not ideal. It’s often the result when there’s a lack of strategic exit planning. Certain industries do not have a robust market for M&A, IPO or succession, in those cases liquidation is the best option for an exit.