from Startup Nation.com 7/13 enhanced by Peter/CXO Wiz4biz 8/14
What’s your Goals in Life? When you start a new business, or as you develop strategies & plans to grow your existing business, you need to think about your Exit Strategy. Are you trying to establish a life-style business that generates income without plans to sell it in the future, or are you building equity in a business that you may want to transform into cash? Depending on your goals, the type of business you choose and the way you grow it should be aligned with your end-game objectives.
Preparing your Exit. If, one day, you plan to exit your business and transform your equity into cash through a Sale, Merger or IPO, you need to prepare for that every step along the way. You’ll need to build value & equity in your company by creating unique products, services, relationships & distribution channels, building an intellectual property portfolio & expanding your customer base. To help, here is an overview of some business exit strategies for you to contemplate and potentially pursue.
1. SALE. The most common Exit Strategy for any business owner is to sell the business to someone else or to some other company. It entails a transaction that can be conducted between two private parties without all the government regulations and oversight that occurs with an IPO. A sale typically results in the seller of the company receiving cash in exchange for the company. The tricky part of any sale is “valuing” the company for Exit. Since most small businesses are privately held, the ultimate transaction price in a sale is sometimes more art than science. Make sure you get more than one appraisal of the business so that you have confidence that the price is right.
2. MERGERS is when two companies get together, establish a value on each company, then combine the two to form one bigger company. In most mergers, the company shareholders receive stock in the bigger company – which is presumably worth more than the stock held in each independent company. Therefore, be aware that in mergers, you may not actually receive cash for some time.
Other Articles of Interest by Startup Nation.com
· Business Planning Articles
· Business Acquisition: 2 Triggers that Get Your Startup Acquired
· How to Value a Business
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