Exit Strategies for Startups
from eHow.com 7/13 enhanced by Peter/CXO Wiz4biz
Some Business Owners build their companies to outlive them, passing them down to the next generation. However, some serial entrepreneurs prefer to grow companies to certain thresholds and exit quickly. Inflated spending can dissolve your company’s usefulness. Owners can also sell all of the business’s assets at deep discounts. If your business has good potential, a larger company may be interested in its acquisition. Additionally, you can go public to make a grand exit.
Run the Company Dry [ Yuk – Wiz4biz]
– can be a straight-forward method of taking your money back out of your business. Simply increase expenses such as your salary & bonuses, irrespective of company performance. Using this technique, you & your Executive Team can take enormous & unwarranted bonuses. This method is only recommended for private companies. Shareholders of public companies, along with the Securities Exchange Commission, expect that the corporation is always striving to make profitable decisions.
– as an exit strategy is generally prompted by outside influences. Liquidation can be voluntary, but because it involves selling company assets at deep discounts, it may not yield the highest returns. A common reason for liquidation is Bankruptcy. Proceeds from selling the business & all of its assets, are used to pay off fore-closed debts. Consider using professional appraisal firms to maximize the value of your business assets. Be fore-warned, however, that liquidation appraisal values can be very low.
Mergers & Acquisitions
– are an option for your business, but your business must establish a successful “track record” first. Large companies may be interested in acquisition for reasons like getting a hold of your proprietary technology & promising growth trends. Alternatively, you may be able to sell your company to larger competitors, so they can secure your market share. As the business owner, you may be able to negotiate specific terms to allow you to exit the business quickly & profitably. [hopefully]
– can be a lucrative exit strategy, if executed well. Business owners generally relinquish control to a board of directors during the Initial Public Offering, or IPO, process. You may or may not be involved with the company after it has gone public, depending on the under-writing terms. This option can generate vast sums for you & your company. However, going public is not without its risks. Investment bankers know how difficult an IPO is, so they won’t bother working with less-than-stellar companies.
Comments: Tell us about your Exit Strategy & how it worked for you.