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Business Exit Strategy

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Anirban Chakraborty
Anirban Chakraborty

This document discusses various exit strategies for business owners looking to transition out of their company. It outlines steps in the exit process like setting exit goals, assessing personal readiness, and choosing an optimal exit option such as selling to an emotional partner, acquisition, IPO, liquidation, or maintaining as a lifestyle company. Key considerations for each option are provided, such as potential tax implications, preserving value, and minimizing risks. Examples of real companies that used different exit strategies are also briefly described. The document concludes with discussing the valuation and exit structuring process.

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Name of presentation Company name More Free PowerPoint Templates at SmileTemplates.com
Business Exit Strategy …a strategic withdrawal THE PLANNED EXIT OF AN OWNER FROM BUSINESS In entrepreneurship and strategic management an exit strategy, exit plan or strategic withdrawal, is a way to transition one’s ownership of a company or the operation of the some part of the company .
Steps of Exit EXITING BUSINESS, PROTECTING WEALTH
Exit Goals… • Create and preserve business value • Minimize tax • 4 D’s DEATH DISABILITY DIVORCE DEPARTURE
Personal Readiness Test  FINANCIAL READINESS Total amount of investable asset  MENTAL READINESS Plan for post-exit days
Choose The Optimal Exit Option  Lifestyle Company  Acquisition  Transition Ownership to Emotional Partner  Initial Public Offering (IPO)  Liquidation
LIFESTYL E COMPANY
Lifestyle Company KEEP THINGS SMALL, TAKE OUT A COMFORTABLE CHUNK, AND SIMPLY LIVE ON THE INCOME. Pros:  Financial freedom. Cons:  Negative tax factors.  Without long-term planning, sources of fund will finish soon.
ACQUISITION
Acquisition A CORPORATE ACTION IN WHICH A COMPANY BUYS MOST, IF NOT ALL, OF THE TARGET COMPANY’S OWNERSHIP STAKES IN ORDER TO ASSUME CONTROL OF THE TARGET FIRM. Pros  Strategic value Enjoy optimum value  Multiple bidders Price to the stratosphere Cons  Acquisitions are messy and often difficult when cultures and systems clash in the merged company.
Business Exit Strategy
TRANSITION OWNERSHIP TO AN EMOTIONAL PARTNER… Someday, my son, all this will be yours…
Transition Ownership To An Emotional Partner PASSING OWNERSHIP TO ANOTHER TRUE BELIEVER WHO WILL PRESERVE YOUR LEGACY . Pros  Less due diligence required  Emotional satisfaction Cons  Selling to family can tear the company apart with jealousies and promotions that put emotion way ahead of business needs .
EMPIRE… AS A GIFT  ANY FAMILY BUSINESS  THE WILLY WONKA CANDY COMPANY The Brand is used on a range of candies in North America and a range of chocolates bars in the United Kingdom. The fictional Willy Wonka handed off his chocolate empire to a little boy who was a loyal Wonka customer.
Business Exit Strategy
Initial Public Offering - IPO SALE OF A COMPANY VIA STOCK MARKET Pros  Highest value  Covers of the magazines Cons  Long processing time  High attorney and accounting cost  Huge restriction and conditions
COAL INDIA LIMITED – AN IPO
LIQUIDATION
Liquidation QUIT AND CLOSE THE BUSINESS DOORS Pros  Easy and natural  No negotiation involved  No worry about transfer and control Cons  Just waste  Undervaluation of assets  End of reputation and business relationships
 APPOLO LIFE SCIENCE Country : Australia Sector: Bio-technology Date: October,2008 Reason: Huge debts  KLEINS Country: Australia and New Zealand Sector: Retail Date: June, 2008 Reason: Mismanagement and debts
VALUATION OF BUSINESS
Process of Valuation  DETERMINING THE VALUE  Market share  Product line  Particular industry’s position – Growing or dying  FINDING THE BEST BUYERS  WATCH THE DEBTS  RECEIVE THE RECEIVABLES  CONSIDER A SCHEDULE
EXIT …  STRUCTURING  TAX PLANNIING  LEGAL AGREEMENTS  NOW, ITS TIME TO QUIT
Business Exit Strategy
Business Exit Strategy

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Business Exit Strategy

  • 1. Name of presentation Company name More Free PowerPoint Templates at SmileTemplates.com
  • 2. Business Exit Strategy …a strategic withdrawal THE PLANNED EXIT OF AN OWNER FROM BUSINESS In entrepreneurship and strategic management an exit strategy, exit plan or strategic withdrawal, is a way to transition one’s ownership of a company or the operation of the some part of the company .
  • 3. Steps of Exit EXITING BUSINESS, PROTECTING WEALTH
  • 4. Exit Goals… • Create and preserve business value • Minimize tax • 4 D’s DEATH DISABILITY DIVORCE DEPARTURE
  • 5. Personal Readiness Test  FINANCIAL READINESS Total amount of investable asset  MENTAL READINESS Plan for post-exit days
  • 6. Choose The Optimal Exit Option  Lifestyle Company  Acquisition  Transition Ownership to Emotional Partner  Initial Public Offering (IPO)  Liquidation
  • 7. LIFESTYL E COMPANY
  • 8. Lifestyle Company KEEP THINGS SMALL, TAKE OUT A COMFORTABLE CHUNK, AND SIMPLY LIVE ON THE INCOME. Pros:  Financial freedom. Cons:  Negative tax factors.  Without long-term planning, sources of fund will finish soon.
  • 10. Acquisition A CORPORATE ACTION IN WHICH A COMPANY BUYS MOST, IF NOT ALL, OF THE TARGET COMPANY’S OWNERSHIP STAKES IN ORDER TO ASSUME CONTROL OF THE TARGET FIRM. Pros  Strategic value Enjoy optimum value  Multiple bidders Price to the stratosphere Cons  Acquisitions are messy and often difficult when cultures and systems clash in the merged company.
  • 12. TRANSITION OWNERSHIP TO AN EMOTIONAL PARTNER… Someday, my son, all this will be yours…
  • 13. Transition Ownership To An Emotional Partner PASSING OWNERSHIP TO ANOTHER TRUE BELIEVER WHO WILL PRESERVE YOUR LEGACY . Pros  Less due diligence required  Emotional satisfaction Cons  Selling to family can tear the company apart with jealousies and promotions that put emotion way ahead of business needs .
  • 14. EMPIRE… AS A GIFT  ANY FAMILY BUSINESS  THE WILLY WONKA CANDY COMPANY The Brand is used on a range of candies in North America and a range of chocolates bars in the United Kingdom. The fictional Willy Wonka handed off his chocolate empire to a little boy who was a loyal Wonka customer.
  • 16. Initial Public Offering - IPO SALE OF A COMPANY VIA STOCK MARKET Pros  Highest value  Covers of the magazines Cons  Long processing time  High attorney and accounting cost  Huge restriction and conditions
  • 17. COAL INDIA LIMITED – AN IPO
  • 19. Liquidation QUIT AND CLOSE THE BUSINESS DOORS Pros  Easy and natural  No negotiation involved  No worry about transfer and control Cons  Just waste  Undervaluation of assets  End of reputation and business relationships
  • 20.  APPOLO LIFE SCIENCE Country : Australia Sector: Bio-technology Date: October,2008 Reason: Huge debts  KLEINS Country: Australia and New Zealand Sector: Retail Date: June, 2008 Reason: Mismanagement and debts
  • 22. Process of Valuation  DETERMINING THE VALUE  Market share  Product line  Particular industry’s position – Growing or dying  FINDING THE BEST BUYERS  WATCH THE DEBTS  RECEIVE THE RECEIVABLES  CONSIDER A SCHEDULE
  • 23. EXIT …  STRUCTURING  TAX PLANNIING  LEGAL AGREEMENTS  NOW, ITS TIME TO QUIT