☠️ Here’s an exhaustive list of the types of buyers or exits you could have:
🧙♂️ Strategic buyers
These are buyers in your industry who want to grow through acqusition. My favourite kind of buyer. There’s two flavours these guys come in.
The type that wants your clients and geography and doesn’t mind shutting down your business once it’s bought.
Or, the type that wants to buy you and keep you on the team to help them grow the larger business going forward.
🏦 Financial buyers
Private Equity buyers, they usually buy a majority share and keep the management team in to help grow the business post acqusition. They’ll want you to have skin in the game so you can have another exit in 3-5 years.
Family offices or private investors. These guys may want 100% control of the business, they may bring in their own management team and let you leave earlier on. Maybe they retain you through a consultancy. They could be rolling up several businesses together.
🏋🏻♀️ Alternate buyers
Owner operator or management buy-in. This could be a buyer that is a specialist in your industry but isn’t currently running a business. They may want to buy you and or several other companies in your industry’s and improve them to make them more valuable or profitable. They likely are looking for a seller note to get into the business cheaply. A safe pair of hands if you can’t find one of the other two types of buyers.
Management buyout. This is when you sell your business to your own management team. Maybe one of the team would lead this and has some cash to invest. They may also seek investors or debt outside the business to complete the acqusition. These types of deals can be a super friendly way to exit.
ESOPs or EMIs. This is when you create a share pool for your employees who effectively become the shareholders of the business. This is a bit more like gifting the business but may be a good option if you can’t find a buyer.
💹 Stock markets
IPO. This is less likely for small businesses but there are smaller markets like AIM in the UK where you can IPO at a smaller size. An initial public offering is a way of selling the company to the public. It’s usually also to raise money for the company to grow. You wouldn’t be able to sell your own shares and exit this way for a number of years while the company begins to trade publicly.
SPAC. These are falling out of favour but this is essentially when a listed shell company acquired your business as a way of you listing and becoming liquid without going the public filing route. It’s getting less popular as there are a few bad performing buyouts as well as zombie funds where investors are waiting years for a deal to close.