Exit

The exit of the owner from the business is called an exit. It is worth preparing for this in advance, in a planned manner - exactly as for all important questions in the life of the company.

The owners do not necessarily have an exit strategy in a start-up undertaking business. They usually don't have a well-supported plan for how to exit the company on the best terms (at the highest price). The company's life path however, it is worth considering this at a later, mature stage. 

Many business manuals also recommend: "always run your company as if you were preparing for an exit." This is a good saying not only because unexpected life situations can always occur, but also because many people face business management problems when the market does not want to give the price they imagined for the business.

The exit strategy highlights that the owner's intention to sell is not enough. For a successful exit and a good purchase price, the buyer must be able to take over the company, be able to manage it or integrate it into his own existing organization at least as successfully as the owner did before. For this, transparent operation, a clear division of tasks and responsibilities, without any skill bookkeeping and balance sheets I need them. 

The first step in the process of exiting the company may be the transfer of operational management. In the process, the owner's excessive personal influence on the operation of the company may emerge even without a stake. This is an essential aspect, since the "one man show" is one of the factors that hinder sales the most. 

This is typically the case, if the owner keeps in touch with all the suppliers, the market information is collected in his head and the contacts of partners and customers are mixed up in his phone. In such cases, the potential buyer spreads his arms and walks away, because he knows exactly that without the knowledge of the old owner, the company is practically impossible to operate. 

The situation is slightly different where there are potential descendants and intergenerational transmission is discussed. This is a sensitive area, because it is always a question of what kind of authorization the successors will be given to manage the company, whether they have any affinity for a leadership position at all, or whether the family ties are the only link that binds them to the company. In any case, the ability to hand over operational management is an important step in the intergenerational transfer of the company.

If the business can function well regardless of the owner, then it makes sense to talk about an exit. In this case, there are basically two types of investors, professional and financial. 

Financial investors always examine the company and its return its value. The professional investor, on the other hand, sees that it is acquisition how much market share you are buying with the company during to your portfolio to integrate. This typically means exploiting synergy effects, i.e. what kind of cost reduction or efficiency increase can be achieved through the transaction. This could include joint sales, bookkeeping, and the creation of a joint technology platform, among others.

Another option is a fusion. Of course, the company evaluation is not left behind at this point either, in fact, it must be carried out for both companies together with a thorough mapping of the synergy effects. It can also be discussed management buyout, the condition of which is the previous successful transfer of operative management. 

The exit of the owner can be implemented gradually with any of the solutions listed so far. The advantage of this is the systematic transfer of ownership knowledge. On the other hand, the disadvantage is that tension can easily arise between the new and the old management either in terms of the strategy to be followed or the management style. In order to avoid this, the new owners typically do not settle for less than a 50 percent share, even if they are otherwise open to not the company as a whole fall into their hands.

Possible exit from the company to the stock market carrying. However, it is good to know that going public is a costly process that requires a lot of administration and extreme transparency. Generally only very stable and larger size (capitalised) is profitable for companies.