In the beginning, businessmen do not like to think about an exit strategy. Most of the businessmen believe that it must be a successful venture. Therefore, it is not ideal to think about failure from the planning process. However, exit planning can be observed as a way to achieve success in due course. Definite reasons can be found behind the importance of an exit plan worked out thoroughly with business transfer agents.
Cause for Exit Planning
Investors always look for the return from the business. Therefore, equity shares cannot be equated with the loan interest. If the share holder observes no return from the share then shares can be sold in the open market. It is not possible to wait for more than three years in order to obtain return of investment.
Loving the business
Business interest is necessary to operate effortlessly. In case the businessman becomes bore after certain period of time then alteration of the job can be ensured with an effective exit planning.
Following exit strategies can be employed with the business in order to make a successful switch from a business to another.
- Merger and Acquisition
Due to a business strategy of merger and acquisition, a company can be bought by a relative larger or similar company in the market. It is generally observed as an excellent occasion to extend the boundary of business for seller. As a result of compliment skills, problems are not observed after the acquisition. Through amalgamation of both the business, profit margin can be enhanced further. More revenue can be generated on the occasion in comparison to creation of complete fresh material.
- Initial Public Offering
One of the preferable modes of exit strategy can be presented with IPO. Optimum amount of profit can be ensured in the process. However, decline has been observed in the effectiveness of the strategy with each passing year due to burst of bubble in 2000. Therefore, it cannot be recommended for the startups.
- Selling company to an acquaintance
Investors can be paid by selling company. It generates similar effect to the strategy of merger and acquisition. In the form of acquaintance, it is possible to come across a perfect buyer. Interested buyer from the operational side is always welcome for creation of effective exit planning.
- Ensure about the cash flow
In case a stable company acquires considerable amount of market place in addition to revenue then lack of buyer for such companies are not observed. However, charge of the company must be given to a person with complete faith. Ownership can be retained on the occasion to earn guaranteed amount of revenue. To make the company healthy, importance must be given on investment.
- Liquidation and end
As an exit planning, businessman can shut the company forever. Complete liquidation of business can be observed on the occasion. Tragedy is seen as a reason behind complete shutdown. Some rules and regulation must be set in order to avoid to disturbance at the end.
By hearing about an exit strategy, you can feel negative. However, it is a great strategy to employ for a successful cash out. All you need to do is sell a business. It’s as simple as that!