Exit Strategies for Business Assignment Example | Topics and Well Written Essays - 1250 words

Exit Strategies for Business - Assignment Example The exit strategy must not be left for the future and the entrepreneurs must decide appropriately for the coming days. The main reason behind the entrepreneurs stepping away from their businesses is the retirements or the terminations of the partnership or the joint ventures. The entrepreneurs must have built their businesses with certain care and efforts and have taken them to a certain position and after certain point of time they may consider handing over the businesses to other entrepreneurs who by applying their experiences and perspectives can take the businesses to new heights. The entrepreneurs may as well decide to exit for the reason that they might have lost interest in that particular business or project and thus may consider entry into new projects or ventures. However, if planning is done in-advance it provides the entrepreneurs to decide on numerous options of exiting from the businesses. The profits can be maximized at the times of shutting from the businesses if prop er strategic business direction is considered (The Great British Business Show, 2011). Advantages of Exit Strategy The main advantages of the exit strategy are that the value in relation to the business built by the entrepreneur can be protected and the future worth of the businesses can be enhanced. The tax impacts upon the estate or family can be reduced to a greater extent through exit strategies. Income can be generated that can assist in retirement or during any disability (Ewing Marion Kauffman Foundation, 2011). Exit Strategies for Entrepreneurs There are numerous strategies for exits, available to the entrepreneurs. They are buy-sell agreement, cash sale to the third party, buyout or recapitalization along with employee stock ownership plan. Each one of them has been explained below: Buy-Sell Agreement: Buy-sell agreement strategy enables the entrepreneurs to end the business relationship by the formation of the parameters for the participants who would be buying the busines s. It can be mentioned that one or two associates are capable of involving themselves with the business while the others may plan to separate themselves from it. The agreement may assist the businesses with funding for the takeovers because of disability or for the reason of the death of the co-owners. The design of the buy-sell agreement needs to be done carefully so that the execution of the strategy does not get overlapped with other estates as well as succession planning tools. Cash Sale to A Third Party: When the businesses are to be sold by means of cash transactions, it can create immediate liquidity for the seller. Through means of cash sales owners are capable of executing immediate separation from the businesses. While searching for the third party buyer, the challenge is the difficultly to find a market ready where the small businesses can be sold. In simple words, the owner needs to put great deal of time and money to search for the profitable deal. Buyout or Recapitaliz ation: In case of the leveraged transactions, the corporate entities such as the managers, partners as well as the business houses tend access the funds so that they can buy the stocks of the existing owner. For the purpose of dissolving the multiple ownership arrangements or for preserving the businesses as a going concern this arrangement of buyout or recapitalization is quite important. The strategy may also be useful while transferring the responsibility of