- Rather than selling a business as a whole, a business owner may choose to liquidate the assets of the business. An owner may select liquidation as an exit strategy if no potential buyers for the business exist and the business no longer makes a profit. At best, an owner can hope to receive the fair market value of the business' assets as payment for them. An owner must pay the debts the business before dividing the proceeds from the liquidation among shareholders or partners, if any, or keeping the profits for himself.
- Soliciting competitors for a prospective buyer of a business may result in the business being acquired by another entity. When an entity expresses interest, the business owner communicates a possible sales price. Since an acquisition represents a private transaction between two parties, an appraisal of the business' value is not legally required, although the interested buyer may request one or more valuations.
The seller of a business will generally receive funds in exchange for her business. In the event that a business owner agrees to merge with the purchaser's operations, the owner may receive stock in the combined business instead of cash.
Seeking potential buyers among loyal clients, family members or employees remains an option for a business owner interested in exiting her business. If a business owner grants an individual an opportunity to pay the full cost of the business over time, a business can be acquired by individuals interested in maintaining the integrity of the business and its operations. - A business owner may attempt a public sale of his business through an initial public offering of stock. However, the costs of preparing for an initial public offering of stock can exceed $500,000.
If a business owner possesses sufficient funds and the flexibility to satisfy the legal demands of an IPO and a market for the business' stock exists, this exit strategy will most likely yield higher returns to the owner compared to alternative departure methods. - An owner may elect to exit his business by running it as a lifestyle company until it is no longer viable. An owner who chooses to treat his business as a lifestyle company accepts that the business' products or services will no longer be desirable for consumption at some point in the future. Until that time arrives, the owner of a lifestyle company will reinvest the minimal amount of revenue necessary to keep the business operating and will keep the remaining majority of profits for himself. When the business is no longer profitable to the owner, he will terminate the business' operations.
next post