Planning Your Exit from Your Business

6. Possible Exit Routes

Consider the possible exit routes open to you. These may include:

6.1 Trade sale (see 7).

6.2 Management buy-out (see 8).

6.3 Family succession (see 9).

6.4 Management buy-in or MBI.

• An external management team, funded by venture capitalists, buys the business.MBIs are increasingly rare, can be hard to achieve and often result in failure.

6.5 Stock-market flotation.

• Few small businesses have the secure earning streams and significant growth prospects needed to float successfully.
• The exit is partial. Selling your shares too soon after floatation could be interpreted as a warning sign by other investors - and you may not be permitted to do so.

6.6 Merger. This will not really give you an exit - though you may be able to retire later.

• Mergers are more common with people businesses, such as lawyers and consultants with complementary strengths (eg geographic or sector coverage).Be careful this does not become a takeover.
• Apart from getting your business into a good market position, it can be difficult to plan for a merger as you will not know how your company might fit with a potential suitor until the chance arises.

6.7 Liquidation. This may be the only option if you cannot find a buyer.

• You do not have to be in distress. Simply sell your assets, surrender your lease and stop trading.
• Businesses with limited earning potential are likely to have net assets as a value benchmark.