It gets to a time in the course of running a business when an entrepreneur feels that, it is time to quit and get into something else or just relax. An exit strategy refers to the plans that one puts in place as to how they are going to terminate the business. In the case of a partnership, the owners may decide to go public and sell shares, such that when they retire, all they will do is transfer ownership.
In case of a sole proprietorship, one may decide to just sell the business, or pass it on to his children, spouse or relatives. Others who lack an exit strategy may die. This will spell the end of the enterprise if, there is no one to take over ownership and control of the enterprise. This is what is known as a default exit strategy.
An exit strategy requires that you put into consideration all the stakeholders who would include your creditors, clients and venture capitalists who have invested in your enterprise. All these people will need to be told how they will be compensated for the termination of their operations. There are four major exit avenues, all of which require their unique strategies.
Death, divorce, disability and departure, all require different kinds of planning for the end. How you terminate the business as a result of divorce is totally different from what you may need to do in case of disability. In the divorce case, you need to put into consideration how the assets will be shared among you and your spouse, while in case of a disability, you may just need to hand over to your spouse.
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