How Should an Exit Strategy Be for Merger or Acquisition?

Exit Strategy for Merger or Acquisition

Do you know about the exit strategy?

Business owners know about it.

What it typically means is mentioned in it, which refers to selling a financial or business asset when certain conditions are favorable. It can be carried out by investors, traders, venture capitalists, and business owners. This strategy can help businesses to discover value. But, this cannot happen unless the company’s assets and liabilities are assessed carefully and thoroughly.

Now that you know what it is, let’s understand its four types.

Types of Exit Strategies

There are mainly four types of exit strategies that businesses use to sell their assets:

1. Initial Public Offering (IPO)

With this option, various businesses can raise capital, and get exposure to stock markets, and security exchanges. Businesses have to meet disclosure requirements. It is noteworthy that all transactions should go on in accordance with trading rules. Besides, it allows offering shares of stock or other forms of security to the public, which purchases and invests in it. 

This type of exit strategy brings a ton of benefits to companies. The best of all gain is its widespread visibility in a quick turnaround with minimal challenges and effort. Interested customers invest, which signifies their engagement and visibility.

2. Mergers And Acquisition

Mergers and acquisitions (M&A) are the practice of combining two companies. It involves the buying and selling of a majority of assets for growth or financial reasons. Many entrepreneurs like to go with this strategy, although an M&A deal involves multiple legal, tax, and commercial aspects. In all, meeting these requirements is not a cakewalk for acquirers. They have to sail across these challenges with the support of experienced CFOs and investment bankers.

4. Private Equity Investment

This is also the practice of acquisition of companies. Typically, private equity firms like it for investing in this option in order to attain ownership of enterprises. However, its shares are for the public. Some interested firms get the stake by acquiring equity or purchasing shares from those who already have them. These parties can be shareholders and lenders who have a stake in them. This is how these firms own the right to purchase more shares.

With this private equity investment, companies win more proactive control over the target enterprise decisions. And, this happens without compromising on unique resources for high returns.

5. Private Investment In Public Equity

It refers to investment in public equity. This alternative attracts large companies’ investors who invest in the securities of a startup company. Their point of attraction is the availability of its securities at significantly discounted prices. With this exit strategy, the investing company can secure a share in the company’s future returns at comparatively low risk.

It is ideal for companies that want to have returned for a long time by investing in research and development.

The Process to Plan an Exit Strategy

An exit plan can make you the winner of opportunities. You can reach out to success and also think of retirement or further investment in different ventures.

Let’s get a roundup of how this strategy is developed.

a. Clear vision

The first and foremost thing is clarity on what you’re going to do in your business. Simply put, the vision should be as clear as a mirror. Determine your aim if it is concerned with profitability or generating maximum values. Once these objectives are clear, you’re moving in the right direction.

b. Find stakeholders & dealmakers

The next thing is to determine who the stakeholders, vendors, bankers, and deal makers would be. You should also think of your own role in the buying or selling process. Then, you should focus on selecting the best-fit professionals to your needs. 

c. Plan of action

This is the final step, wherein you should create a plan of action. It should be corresponding to your goals. Ensure that you have dedicated the proper time and resources to each step. If so happens, you can ensure to follow an exit strategy successfully.

Discover all possibilities related to sales as a part of your process. Invest your precious time on thinking about when to sell your business, what kind of business you’re divesting from, and who your potential buy-side party would be.

Maximise Value Out Of A Sale

It’s always good to maximize values or profit via any deal. For ensuring it, you need to spend time brainstorming all possibilities. Take into account that hasty decisions are not good. So, you should avoid this practice. When it comes to searching for a potential buyer, you can find an excellent online deal discovery platform. Such platforms allow you to access fair deals, and increase the visibility of actionable deals and opportunities for bolt-on, tuck-in, or other acquisition requirements.   

Professional Guidance

Once the plan of action is ready, discuss it with a business broker or banker, or Chief Finance Officer. These professionals have hands-on experience, which enables them to assess your sale process. In addition, their contact list can let you find potential buyers who would agree to buy on fair terms. All in all, they are quick in getting deep into insights any deal, which proves a true value builder. Above all, you get peace of mind.


An exit strategy is a plan to sell assets or dispose of tangible assets by an investor, trader, venture capitalist, or business owner once everything goes well as per set criteria. There are four types of exit strategies- initial public offering, merger and acquisition, private investment in public equity, and private equity investment.

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