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Seven strategies for exiting your
business
By Pat
Curry • Bankrate.com
 Business
expert and author Peter Engel, who has founded and profitably exited
eight companies, has identified seven exit strategies. Which one
looks like your company?
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Seven exit strategies
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- Selling to a strategic buyer -- a supplier, customer
or competitor
A strategic buyer benefits from the innate value of your
business and from the "specific synergies that result
from the acquisition." You represent a steady source of
a product they buy, or you wholesale their product and
they want more control over distribution.
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- Selling to a financial buyer
A financial buyer brings money and maybe management skills
to the deal, but has no particular interest in your area
of business. "If your company is profitable and can stand
on its own, financial buyers will notice," Engel writes.
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- Going public
Technically, going public isn't an exit strategy because
the owners typically have to stick around for awhile before
they can sell their stock and cash out. This option generally
is available only to well-funded companies with significant
growth.
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- Selling to your heirs or employees
Your buyers are intimately familiar with the real value
of the company, but generally don't have the money to
buy it or the credentials to raise the money. The structure
of the deal will be quite different from other strategies,
involving a long-term payout from the profits of the company.
What is most important is ensuring that you've sufficiently
trained the future owners to protect your investment.
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- Liquidating your assets
Sometimes the parts of a business, with its assets and
goodwill, are worth more if sold separately than if the
whole business was sold at one time.
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- Enforced liquidation
It's not a strategy you plan, but if sales dry up to such
an extent that not even Chapter 11 bankruptcy is acceptable
to creditors, then full liquidation in Chapter 7 bankruptcy
may be the only alternative. This exit consists of "salvaging
as much as possible from the ruins," Engel writes.
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- Managing for life
This is the de facto strategy frequently chosen by entrepreneur-owners.
Simply put, you keep your business until you die. That's
fine, if it's what you choose. If it just happens because
you never got around to figuring out what to do with the
company after you're gone, it's a mess for everyone you
leave behind.
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Pat Curry is a freelance writer
based in Georgia
-- Posted: Nov. 29, 1999
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