There may come a time when you’ve taken your business idea as far as you can or you get an offer that’s just too good to pass up. Or you may just be ready to retire.
But there comes a point in every startup’s lifecycle where it’s time to think about an exit strategy. That could be as simple as handing off the reins of your successful company to a family member or your hand-picked successor. Or it could mean a buyout, acquisition or IPO.
But whatever your goals, you need to plan for an eventual exit – and yes, that includes the possibility of your own death or disability.
So start by drawing up a succession plan, and get legal help to make sure that you’ve covered all the bases. That way you’re covered in case of unforeseen events.
If your company has the revenue and growth to support an IPO, the public markets could be the way to go. But it’s a pricey, complicated option, and you may not enjoy answering to Wall Street every quarter. But there’s no question that it can be the route to riches and funds for growth if your company is hot enough.
Other options include a buyout from your partners or an acquisition by a rival. It never hurts to talk to potential acquirers, but don’t reveal too much about your company unless talks turn serious, and do so then only with a non-disclosure agreement. And whatever you do, pay especially close attention to how the deal is structured, how the money is divvied up and what the tax implications are – before you sign anything. This is one area where you don’t want to skimp on legal help.
Adapted from A Guide to Small Business Exit Strategies at Small Business Computing.