how to write an exit strategy for your business
How to Write an Exit Strategy for Your Business
Exit strategy is a predetermined objective which is employed by a businessman who is planning to transfer his business responsibilities to another person, for various reasons. This article will help you to know how to write an exit strategy.
- Selling the business to a family member.
- Selling the business to other company, which is usually larger than yours (acquisition and merger).
- Selling the business to Employee Stock Ownership Plan (ESOP), in which the stocks of the company is sold to the employees of the company itself.
- Initial Public offering (IPO) is a risky strategy in which the stocks of the company are sold to the public. The investors need to take a risk because the traders get in (buy stocks) and out (sell stocks) and may cause a financial swing.
- How much investable assets should I have in my account?
- What would be the tax impact on the amount that I would receive after I quit?
- What are the legal agreements that I should sign before I complete the disposal?
- Does my business have the required opportunities and value from the view of the buyer?
- How can I clear my debts, successfully?
- Liability of Owners, officers and directors
- State and federal security laws
- Rights of minority owners
- Cost of transfer of ownership
- Buy-sell agreements with shareholders and partners
- Capital gains upon transfer or sale of the business
- Corporate and personal taxes
- Properties owned
- Reasonable compensation limits
- Retirement plans
- Income tax
- Capital Gains Tax (CGT) tax
- Train the new managers.
- Start your debt reduction program.
- Update your business plan.
- Dispose the loss-making subsidiaries and surplus machinery.
- Approach venture capital backing for MBO (Management Buyouts).
- Discuss the propositions with the concerned bank management.
- Appoint lead adviser.
- Conduct environmental audit.
- Reduce the stock levels of your company.
- Review personal financial positions.
- Undertake mock due diligence.
- Most importantly, plan the activities to get engaged after your exit from the business.