Creating a business or startup is a bit like being a chessmaster—to be successful, you have to be able to see the endgame even before the game begins. As you create a business plan and develop a strategy to accumulate capital, you should also be thinking ahead to how you will move on from your successful business to your next big thing. If you are ready to start a business or simply need to update your business plan, talking with an experienced business formation and planning lawyer can get you on the right track. In the meantime, take a look at some of the most common exit strategies.
- Sell It to Google! (Mergers & Acquisitions)
Many startup owners hope to create such a successful and profitable company that larger, more established businesses will want access to what they’ve created. For example, a technology startup may plan to develop a cutting-edge Virtual Reality platform that a corporation like Sony or Microsoft would want to expand its video game technologies. For large corporations, acquiring innovation is often cheaper than developing it in-house, and for startup owners mergers can often be very profitable!
- Keep It in the Family! (Selling Your Interest)
Other business owners plan to exit their creation by selling their interest in the business to someone else who will take over. This could be a family member or friend, or simply another businessman who sees the value in the company and is in a position to buy it and scale it. This is a common exit strategy for family-owned businesses.
- Go Public! (Initial Public Offering)
Initial Public Offerings, or IPOs, were a very common exit strategy during the dot-com boom in the late 1990s and early 2000s. An IPO is the way a privately held company becomes publically traded, offering investors the opportunity to purchase stock in the company in order to raise capital. Recently, however, there has been a decline in the number of startups taking advantage of IPOs. Reasons include the uncertainty associated with valuing the company’s stock as well as the duties that are owed to shareholders in a company.
- Let It Ride! (Operate the Business)
Some business creators plan to create a company that is simply a goldmine and can stand on its own as a profitable enterprise. If they are successful, they can maintain ownership of their creation while retaining the services of a qualified, trusted individual to run the day-to-day operation of the company. Their successful business can then provide a steady stream of income for additional ventures.
- Shut It Down! (Liquidations)
Some business creators don’t want to move on from their companies at all, but just want to run things until they’re finished. For these business owners, it might make sense to simply plan to liquidate their business’s assets when they decide to wrap up their enterprise.
Regardless of the type of business you’re creating, your success will depend on planning ahead, and those plans should include an exit plan. Our firm has been helping South Carolina businesses develop business plans and exit strategies for years, and our attorneys are available to help you create a custom exit strategy to maximize the value of your business while accomplishing your other goals. If you’d like to speak with someone about developing your exit strategy, contact Willcox, Buyck & Williams, P.A. today for a consultation.