Just as business strategic models, such as the integration of network-based and razor-blade business models, are important to a new enterprise so is an exit strategy from the market. Successful entrepreneurs develop exit strategies well before going into the market because the choice of an exit strategy determines the development decisions (Williamson, n.d.). As such, the paper discusses the exit strategy for my beauty venture. Typical exit strategies include management buyouts, strategic acquisitions, and initial public offerings (Williamson, n.d.). The choice of a business exit strategy depends on the need for control of the business after exit and on whether there is need to have the business continue running the same way or change strategy upon exit. For my business, I choose management buyout as the best exit strategy.
Management buyout is a process where the current management team of the beauty venture buys the stake of the company to take control from the current owner. The management buyout includes total stake buyout and majority share purchase (Williamson, n.d.). For my beauty venture, I chose both majority share purchase and gradual total stake buyout. I will use management buyout to save the control and administrative cost.
Management buyout is key to the business and the owners in three folds. First, management buyout is simple and easy to execute (Williamson, n.d.). In fact, the exit model allows for gradual delegation of control to the new owners that ensures smooth transition. Second, management buyout has high chances of success without much pushbacks from management. Third, the strategy allows for confidentiality of the process since the internal buyers are involved in the process (Williamson, n.d.). Maintaining exit confidentiality ensures that clients, suppliers, and staff remain confident in the business. Additionally, keeping the business sale confidential prevents leakage of sensitive information about the company to external parties.
Reference
Williamson, P. (n.d.). Advantages and disadvantages of a management buyout. Selling My Business.