You’ve built a business that any reasonable entrepreneur ought to be proud of. Now, for whatever reason, you’re ready to step back and enjoy the finer things in life, or perhaps charge ahead into the next phase of your career.
Before that can happen, you need to find a way to gracefully exit the business you’ve built, or at least step back from day-to-day management in a way that doesn’t harm your continuing financial interest in the enterprise.
These five exit strategies can all help you achieve that goal. Some represent a total break with the business, while others move you into more of a “silent partner” role. Evaluate them and decide which makes sense for you.
Table of Contents
Take on a Strategic Partner and Step Back
If you want to retain a financial interest in (and possibly a say in the direction of) your business, consider part of it to a strategic partner. This preserves the upside of ownership while creating new opportunities for growth what you can create on your own.
“One way to offer new services without sacrificing productivity is to form a strategic partnership with another business,” according to business advisory group DeLeon & Stang.
Depending on where your business is in its lifecycle and which industry it operates in, it could make sense to pursue a strategic partnership with a competitor, a complementary business in a related industry, or a capital partner such as a private equity firm. Speak to your business coach or sell-side consultant for personalized advice.
Prepare for an Initial Public Offering
Preparing for an initial public offering is more work than taking on a strategic partner, but it could lead to a bigger payoff and perhaps a cleaner break with the business. Remember, you don’t have to include every common share in the IPO; you can keep as much as you’d like for the current ownership group.
Sell Your Stake to a Partner or Major Shareholder
Another option is to sell your personal stake in the business to a fellow partner or major shareholder. This could be faster than an IPO, taking anywhere from a few weeks for a straightforward transaction to a year or more for a more complicated one, according to Acquira.
Sell to Your Employees
Also known as an ESOP, an employee stock ownership plan allows you to reward your employees for a job well done by giving them literal ownership in the business. However, it can take many years to fully transfer ownership in this fashion, so it’s not the wisest choice if you’re looking for a quick exit.
Merge With a Competitor or “Complementor”
Last but certainly not least, consider merging your business with another. This option is similar to taking on a strategic partner, except you’re combining two distinct businesses into one. Depending on how the deal is structured, you could be in a position to retain an ownership stake in the new business and possibly a more active role as well, although you’re probably not looking for too much extra responsibility if your ultimate objective is a clean exit.
Onto the Next Adventure
Leaving your current business behind doesn’t mean you have to hang up your entrepreneurs hat for good. In fact, it could be an opportunity to begin the next stage of your business career unencumbered by your previous endeavors — and with more capital to invest in your next adventure.
Of course, it’s important to exit your business the “correct” way, in a manner that benefits you, any remaining partners, any remaining employees, and possibly others with a stake in the enterprise. There’s nothing better than starting with a totally blank slate.
