This is Day 7 of my 30 day writing challenge and I wanted to write about some thing that I am always striving to achieve. As an entrepreneur, you may encounter a time when you’ve just had enough. Perhaps you want to retire and relax for the rest of your life. Or maybe you want to move on to other things. Either way, you will have to decide what will happen to your business.
This isn’t an easy decision to make. The business is more than a sign on the wall and a room in a building. It’s the livelihood of your employees, and represents years of blood, sweat, and tears. There are accounts to settle and clients to hand over. Should you just cut them all off at the drop of the hat? Take the money and run?
You could, but that’s not the responsible thing to do. You’ll need an exit strategy that will return your investment in the company while leaving something behind for the employees and investors.
IPO
This is a tricky option for smaller businesses, because going public is not a guarantee that people will buy stock. Your stock may end up languishing or even losing value if the IPO isn’t handled properly. The stock market will need to see the value in your company first, and that means being notable on several fronts.
Management Buyout
Perhaps the easiest and least complicated thing to do is retire and hand the reins over to someone else. It entails the least amount of paperwork and fuss. Small and family businesses are most likely to employ this type of exit strategy.
If you want your business to live on (and succeed) after you’ve left, you have to pick your buyer very carefully. The buyer has to be a believer in your business, someone whom you can trust to carry on your original vision. This could be either a customer, an employee, or family. You can also choose to sell to people who have no prior relationship to you, but you have to interview them thoroughly and determine their plans for your business. If you don’t like the direction they’re going to take, you may have to look for other buyers.
Merger/Acquisition
This is similar to the management buyout, only the buyer is a company and not an individual. When another company buys yours, the two are merged together into a single entity. There are several advantages to this approach over a management buyout, some organizational, some financial.
If the fit is good, the two companies’ offerings will complement each other and bring greater success. Your employees have a better opportunity to thrive in the new company, as opposed to what would’ve happened if you’d just shut down your doors. The merger may also give your company access to more resources as the bigger company integrates yours into its own operations.
On the more financial side, your chances of getting a higher payout for your company are better with a business merger than with a buyout, just because the buying company has more money to burn. Another factor in the increased price is that your company is not being sold on the value of its assets, but rather the potential benefit it would bring to the buying company. It’s not uncommon for a company to be sold for a much higher value based on that alone.
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