Exit Strategies for a Business

Many people start their businesses with the ultimate goal of selling it. It doesn’t mean that if you are not planning to sell your company then you don’t need any exit strategy. The exit strategy is what makes your business model clearer. It is a method by which entrepreneurs and investors transfer ownership of their business to a third party, or by which they regain their money invested in the business with a large profit.

Exit strategies related to start-up funding are not taken very seriously. The exit strategy related to start-up funding is what happens when the investors who had put their money in a start-up gets their money back, usually after a few years, for a lot more money than their initial investment.

•    Liquidation

For many small businesses, liquidation is a very common exit strategy. It’s one of the easiest and quick ways to close a business broker and may sometimes be the only option. If you accept outside investment, you essentially take on partners, and those partners at some point are going to want liquidity. To make any money using liquidation process as an exit strategy, you have to have some valuables like land, equipment etc. which you can sell.

•    Management buyout

If you have decided to recapitalize and sell the company to the managers and employees it is known as a management buyout. This type of transaction is usually financed through the consolidation of debt or private equity investment, with the debt bankroll by the assets of the company.That is the strategy that business brokers Sydney apply during sell & buy a business.