Exit strategy business plan acquisition plan

The company would then use the voting rights connected with those shares to force the remaining shareholders to accept a lower price in order to complete the merger.

Exit strategy business plan acquisition plan

Enter your email to reset your password Or sign up using: The sooner you start, the more rewarding your eventual exit is likely to be. In fact, you already may have started planning without even realizing it. Fitzgerald, managing director of Summit Partnersa growth equity firm with offices in Boston, Palo Alto, and London.

Exit strategy business plan acquisition plan range of exit strategies includes taking the company public through an initial public offering IPOselling the company to a strategic acquirer, or recapitalizing and selling the firm to the management team, also known as a management buyout.

How to Choose an Exist Strategy: A Look at Your Options Before you can choose your exit strategy, it is important to understand the basic characteristics of each option. You and your management team typically remain in place for a period of years, your investors and managers may be able to sell some stock, and your company continues to operate much as it has in the past.

exit strategy business plan acquisition plan

However, your company will be subject to additional regulations, such as Sarbanes-Oxley requirements, and Wall Street analysts and institutional investors will scrutinize your quarterly performance.

A strategic acquisition — In a strategic acquisition, another company purchases your business, either with cash or stock in the acquiring company or with some combination of stock and cash. The disadvantage of this exit strategy is that "you are likely to lose operating control," he adds.

It provides immediate liquidity to the owner and early shareholders, and allows the company to continue as a private enterprise. This exit strategy marks a change of ownership, gets the shareholders some liquidity, yet provides a seamless transition for the company and employees and other constituencies.

Considerations in Choosing an Exit Different people start companies for different reasons, and that can influence their exit strategy. They want to stay small for perpetuity.

Initially, the founder s own percent of the business. If they take on investment over time from venture capitalists, angel investors, equity investors, or individuals, they usually give up a portion of the company, or shares, and those shareholders will have a say in any potential exit strategy.

The following are some of the things to consider when choosing an exit strategy: Consider your future role in the business. Part of your decision will depend on whether or not you want to continue to manage your business.

In an IPO or a management buyout, you and your team will play much the same roles before and after the transaction. In a strategic acquisition, however, the acquirer may replace you and your team with its own people.

A strategic acquisition can be an excellent solution for companies that are struggling with succession-planning issues, while an IPO or a management buyout will work more effectively for teams that want to stay in charge.

Evaluate your liquidity needs. Many business owners view their exit strategy as a chance to reap the benefits of their hard work and to increase their personal liquidity. However, not all exit strategies work equally well in this respect.

Business Exit Strategy Definition | Investopedia

In an IPO, for instance, your shares likely will be subject to a share lock-up agreement, which means you will not be able to sell your shares -- even after the IPO -- for a period of time, typically six months.

A strategic acquisition will often generate an immediate cash payment, thereby increasing owner liquidity. Sometimes, however, the final price is not determined until the end of an earn-out period, which can last several years.

In a management buyout, the original owners also generally will receive liquidity over a period of time. If you accept outside investment, you essentially take on partners, and those partners at some point are going to want liquidity. In this scenario, you will want to choose an exit strategy that allows you to retain an ownership interest.

An IPO allows you to keep a substantial interest in the company, as well as to time the ultimate disposition of your shares to meet your own personal needs. However, an acquisition will generally eliminate, or at least greatly reduce, your ownership interest in your company, as well as your ability to influence its future direction and performance.

Construction Business for Sale Listing Groups

Consider the impact of Sarbanes-Oxley. Taking a company public now entails meeting the costly, and somewhat bureaucratic, requirements of Sarbanes-Oxley. Many private companies begin working toward these standards early on -- establishing an independent board, arranging for an independent audit, and upgrading their systems and reporting to required levels.

Meeting these standards not only will allow your company to go public, but also may increase its attractiveness to strategic buyers.Part of the business planning process is the exit strategy -- bailing out of the business at some point before it dies.

The exit strategy is actually .

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EXPLORE SUMMIT. The Exit Planning Summit, powered by the thought leaders at the Exit Planning Institute, is the “Super Bowl” for Exit Planning Experts, Advisors, and Middle Market Business Owners. All good business planning documents have a clear business exit plan that outlines your most likely exit strategy from day one.

It may seem odd to develop a business exit plan this soon, to anticipate the day you'll leave your business, but potential investors will want to know your long-term plans.

A business exit strategy is an entrepreneur's strategic plan to sell their ownership in a company to investors or another company.

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