Exit Options

This is when you sell your entire business to another company, usually in the same industry. The advantage here is that you can potentially achieve a high price if there is strategic value for the buyer. However, the process can be complex, and you may need to stay on for a transition period.

In this case, you're selling to an investor, such as a private equity firm, venture capitalist, or angel investor. Investors typically have funds available and can act quickly. However, they'll expect a return on their investment, which means they may push for changes to increase profitability. Also, they may not purchase the entire business, leaving you with partial ownership.

A merger occurs when your company combines with another, you may choose to form a new business entity. This can be a great way to pool resources, access new markets, or increase market share. However, you'll lose sole control over the business, and the process of merging operations can be complex.

As the name suggests, this is when you sell a portion of your business. This can be a good way to raise capital while retaining some control. The downside is that you'll have to share decision-making power and profits with the new stakeholders.

An MBO is when the existing management team buys the business. This can be a smooth transition because the buyers already understand the business. An MBI is when an external management team buys the business. This brings in new perspectives and skills, but it also introduces more risk because the new team may not be as familiar with the company's operations. Both may not be able to afford the market price, requiring external financing, which can complicate the process.

This is an option where the business is sold to a trust set up for the benefit of all employees. This is an increasingly popular option following legislation in several countries providing tax incentives for this type of sale. The benefits of this option include potential tax advantages, maintaining the existing business culture, and a greater degree of continuity. It can also be an effective way to reward and motivate employees. The downside is that it might not maximize the immediate financial return to the owner compared to other options, as the sale price must be fair and reasonable rather than the highest possible.