Exit Strategy » Overview

Thinking about positioning your company for sale? Or maybe you need to develop an exit strategy for your business, but you don’t know where to begin? You’re in the right place.

Before we go into the purpose of having an exit strategy, we must define it. Investopedia defines exit strategy as:

“A contingency plan that is executed by an investor, trader, venture capitalist or business owner to liquidate a position in a financial asset or dispose of tangible business assets once certain predetermined criteria for either has been met or exceeded.”

The Purpose of The Exit Strategy

So, what’s the purpose of creating and eventually executing an exit strategy?

Whenever you’re thinking about exiting a company, it’s usually for one of the following reasons.

  1. Your company is not performing and is not able to generate acceptable profits.
  2. You want to go onto other ventures.  Whether you just want to get out to get out or you want to move on.
  3. Age.  You realize that you are not 25 years old any more, retirement is starting to sound attractive and you do not have anyone to leave your business to, so selling simply makes sense.
  4. Illness.  It is not your decision but you have to take this next big step.
  5. You just experienced some other life event that is beyond your control and you need to liquidate.

Composing an exit strategy can be lengthy and highly risk as adverse events could greatly impact the work you’re putting in now. Some of these events include and are not limited to estate planning, divorce, lawsuits, retirement, investor relations, etc.

[box] Business Leaders: Do you have an Exit Strategy? If not, why not? If you do, how has it helped you? Let us know over in the The Strategic CFO Lab Community. [/box]

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Click here to download your Exit Strategy Checklist.

By no means is this list entirely complete. Due diligence and checklists vary from transaction to transaction depending on company, industry, type of sale or acquisition. We will be more than happy to work with you on a comprehensive list to assure that you have a successful transaction for your specific company.