Devising an appropriate exit plan for a startup- How to dissolve a startup like a pro ?

Achal Chaurasia– Exit Plan of Startups

Every entrepreneur or businessman starts a business, company, or startup to succeed at it. If we consider the silver lining, every entrepreneur invests a lot of effort, hard work, hours of planning, management, time, and mind to see his/her company flourishing and reaching great heights. However, as important it is to possess a positive approach while dealing with such things, it’s equally important to have an exit plan in case things don’t proceed the way one wants them to, due to many factors.

An exit plan is certainly one of the most important things to be planned to prevent unmanageable damage or losses just in case the startup crashes and doesn’t turn out to be profitable as thought. Having an elaborate exit plan adds up to solid business planning.

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In my opinion, the exit strategy of a startup should be a part of the whole business planning at an initial level only. I have reasons to validate this statement of mine and they are mentioned below-:

Being backed up with a neutral stance

Thinking and planning about the future to be positive as well as negative will put an individual in a neutral stance towards a project. Having a neutral mindset will guide the person to think both ways every single time and will help him/her make plans keeping in mind both sides of the matter which will, in turn, safeguard major complications and mess-ups that come up after a certain point in the startup mechanism.

Better Quality Planning

As plans shall be made keeping both positive and negative perspectives in mind, the chances of wrong decisions and uneasy repercussions turn out to be negligible. This is how having an exit plan at the time of business planning shall yield great results. Marked by the differences in the field, size, type, and investment made in which the startup deals, the exit plan differs.

Here are some of how startups may exit the market-:

Strategic Acquisition

Following this way, usually, the company that the owner plans to dissolve sells itself to a third party that acquires all the assets, responsibilities, names used, rights that were previously reserved under the company’s name, etc. after the documentation of acquisition stands complete legally.

Usually, companies that operate in the same field are interested to acquire and merge as one of the companies plans to dissolve. For instance, a coffee shop might be interested in acquiring and merging a bakery brand so that both the companies can operate collectively later and the assets acquired can be put to relevant use.

Initial Public Offerings ( IPO )

This is a common exit plan opted by large businesses by selling their stocks to other businesses or individuals to be useful to the general public.

According to my, this exit plan is not suitable for small businesses, especially the ones with franchise distributions made already as it complicates the process of making offerings in this case.

Management buyout

Employees who the owner thinks are capable and interested enough to carry forward the business or startup can be considered as go-to options in case of a startup getting dissolved or sold out. This way the startup gets a well-deserving and capable owner that carries forward the business legacy with positive intentions and great experience.

Family succession

The responsibility of managing the startup can also be given to someone in the family of the owner who is interested to take over and also trustworthy to be the right successor.

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At the end

In case no option from the above-mentioned list of options holds an appropriate place as being a favorable exit plan, the company can be made liquid in the approach of sale and the assets can be sold collectively or separately to different people also, to bear with the monetary loss in a comparatively efficient way.

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Author- Achal Chaurasia

A young businessman who has been in the line of entrepreneurship for quite a few years. He is an active learner and loves to know more about new technological developments coming up as well as how they can be put to great use to yield better results for society.