People keep concerning the best way to enter the market. Yet, most of them do not plan how to get out off there when the conditions suddenly become not viable for the business to operate or grow. The exit strategy is important to consider before a company enter a market. There are 5 primary exit strategies available for the entrepreneur.
- The Modified Nike Maneuver: Just Take It. One favorite exit strategy of some forward-thinking business owners is simply to bleed the company dry on a daily basis. Pay yourself a huge salary, reward yourself with a gigantic bonus regardless of actual company performance, and issue a special class of shares that only you own that gives you ten times the dividends the other shareholders receive. Although we frown upon these practices in public companies, in private companies, this actually isn't such a bad idea.
- The Liquidation. One often-overlooked exit strategy is simply to call it quits, close the business doors, and call it a day. If you liquidate, however, any proceeds from the assets must be used to repay creditors. The remainder gets divided among the shareholders--if there are other shareholders, you want to make sure they get their due.
- Willy Wonka Style: Selling to a Friendly Buyer. If my neighborhood piano bar owner had asked, we might have wanted to buy the business ourselves. You see, if you've become emotionally attached to what you've built, even easier than liquidating your business is the option of passing ownership to another true believer who will preserve your legacy. Interested parties might include customers, employees, children or other family members.
- The Acquisition. The acquisition was invented so you can sell your business and leave the kids money, still spoiling them rotten, but at least sparing the business from second-generation ruin. Acquisition is one of the most common exit strategies: You find another business that wants to buy yours and sell, sell, sell.
- The IPO. Bring it to public. Sell shares to public stock market and become public company.
(source: Stever Robbins, 2008)
1 comments:
Recent events here in the U.S. would cause me to add another to the list: Bailout. Get "too big to fail," then pay yourself way, way, way more money than could be humanly justified in a hundred years. Then have the Federal Government give you a $110 billion bailout, and immediately start spending on more lavish parties, tries, and golden parachutes.
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