Which of the Four Exit Strategies is Yours?
When planning for your exit, the first essential question to answer is "Ideally when do I want to exit?"
The next important question is "How do I intend to exit?" Your answer identifies the issues you face, and the tactics to consider, to achieve your successful exit.
There are, in fact, only four ways to exit from a business. Identifying now your most likely exit strategy creates a clear path and plan. The four possible exit strategies are:
- Pass it to Family
- Sell it to Outside Third Parties
- Sell it to Inside Key Employees
- Planned Liquidation
Note that holding onto the business until you die is not one of the four strategies. Death is not a strategy! Your death may determine when you exit, but it will not determine how. If you so love your business that you want to work in it as long as life allows, that is a blessing. But at your death, one of the four exit strategies certainly will occur.
Understanding the four different strategies is critically important because they each demand different paths to success. For example, to pass your business to your kids is a very different process than to sell your business to an outside buyer. The differences are so important, that we have given each of the four strategies an admittedly corny, but memorable, single word description:
- Pass it to Family - a "Passer"
- Sell it to Outside Third Parties - an "Outie"
- Sell it to Inside Key Employees - an "Innie"
- Planned Liquidation - a "Squeezer"
The Exit Strategy Decision Tree
In less than 6 minutes it takes you to watch the attached video, you can gain an exclusive and invaluable exercise on how to determine your exit strategies. I also included the Exit Strategy Decision Tree, which illustrates how to determine your strategy.