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Exit Strategies in Business - Coggle Diagram
Exit Strategies in Business
Definition
Entrepreneur's strategic plan to sell his or her ownership in a company to investors or another company.
Ideally, an entrepreneur will develop an exit strategy in her initial business plan before actually going into business.
Purpose
If Business is Successful
To liquidate their asset
An angel investor in a startup company may plan an exit strategy through an initial public offering (IPO)
If Business is not Successful
To limit loss
A planned termination of operations and a liquidation of all assets are sometimes the best options to limit any further losses.
Key Aspect
Business Valuation
Type of Exit Strategies
Initial Public Offering (IPO)
An initial public offering refers to the process of offering shares of a private corporation to the public in a new stock issuance.
Acquisitions
An acquisition occurs when one company buys most or all of another company's shares.
Buy-Out
Buy-Out is a transaction where a company’s management team purchases the assets and operations of the business.
Harvesting
A harvest strategy involves reducing spending on an established product in order to maximize profits.
Outdated products often are the subject of harvest strategies as profits are reinvested in newer models or newer technologies.