Many business owners either with a new or established business are seeking to capitalize on their hard work and move onto other things. Some entrepreneurs are seeking capital from angel investors and need to provide suitable exit strategies within their business plans.
Please remember that venture capitalists are seeking high returns in exchange for their high risk investment. Many of them expect your company to go public within a short time frame.
Angel investors are not so concerned with you going public, but are still looking for a quick and high rate of return on their investment. They are not as sophisticated as venture capitalists or institutional investors and are more likely to wish to be in your business.
Here are a few ideas for you.
If you have no investors and merely wish to exit yourself from your business. Investors do not accept these exit strategies as being very professional.
Sell: The most obvious option if you have a viable business.
Asset Strip: You can pay yourself a huge salary and sell off all viable components of the business. It could be that this is a more profitable option than selling your business as a going concern.
Minimize the Business: If time is your problem then just restrict your trading hours and/or product line. Outsourcing some areas of the business will give you more time.
Liquidation: Cease trading, pay off your debts and sell your assets. Close the doors and walk away with your memories and stories.
Give your Business Away: You can remove yourself from the business and leave your business to your heirs. Take legal and financial advice first though please.
Here are a few more conventional exit strategies that an investor will be interested in hearing about.
Consultancy: You could let your management team take over the running of the business and take on a consultancy or executive role. This can only be done if your management team are capable of running and improving your business. This option is quite often take if you personally have reached the pinnacle of your ability, or want to spend more time away from the business. This option allows for a more experienced management team to run the business whilst you retain an income and influence on the business. An example of this would be Anita Rodderick of Bodyshop – who took the opportunity to follow her love of conservation whilst still retaining some influence over the company that she founded.
Merger or Acquisition: This is a particularly attractive option when you are a small company with a strong presence in a niche market. There are many small company owners that have become very rich by being bought out by the likes of Google or Amazon. These large companies do this as they want the products you have and buying a company is cheaper than the research and marketing necessary to bring these products to market. The merging or acquiring company is paying for your assets, patents, copyrights, good will, market share and client base. In a merger you can arrange for a nice consultancy post for yourself in exchange for giving up your chairmanship. Not quite giving up the business but not a bad lifestyle.
Franchise: If you have a business that can be duplicated in many different regions why not consider setting your business up as a franchise. Similarly of you have a business with numerous outlets why not franchise some of these? Alternatively why not turn your head office location into a franchise headquarters and then sell off franchises? This option does take some time and money but can drastically decrease the time that you have to spend with your business, whilst still providing a good income.
IPO: The holy grail of business and one that you read about when people become “over night millionaires”. About as likely as becoming an overnight millionaire by winning the lottery. Unfortunately rather than handing over your Dollar/Pound/Euro for a ticket – you are going to spend hundreds of thousands on lawyers, analysts, PR and bankers!
Which ever option you choose – choose carefully and good luck with your new found wealth and leisure.