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Should I have an Exit Strategy for my Startup?

Though it may seem counter-intuitive for a startup founder to make plans for their eventual exit from the business, a clear exit strategy is one of the most important things a startup should have.

Eventually, all founders will have to let their business go – be that for retirement, financial gain, or just to move onto something else.

Whilst you’re probably not looking to pass your business on just yet, having a solid exit plan from early on in your business development is crucial.

Not only does it help to steer your business in the direction of its goals, but it’s also appealing for investors to see that you’ve planned for any potential outcome.

In this blog, we’ll break down everything start-ups need to know about planning their exit strategy.

Types of exit strategy

The best exit strategy for you will depend upon the type of business you run, as well as your business goals. Once you decide what route you want to take, you can make business decisions with this in mind.

Here are just a few of the many exit strategies available:


An acquisition (often grouped with mergers) is the process of one company buying another and incorporating it into their business operations. It is one of the most commonly used exit strategies, with famous examples being Google acquiring Android and Disney acquiring Pixar.

Acquisitions are typically one-sided, with the dominant company buying out the smaller company through either friendly or hostile means.

It can be a beneficial option for both companies, giving the founder of the smaller company a large sum and helping the larger company to reduce competition, expand their IP, and maybe even break into a new market.

If this is your exit strategy, it is best to start building relationships with potential buyers early and work to drive up your business valuation. If you plan ahead, you’ll be prepared for when the time eventually comes.


Mergers are similar to acquisitions but typically occur between two companies of equal size. In this case, two companies will merge together to form an entirely new entity, often with a different name.

This is a beneficial process for both businesses, helping them to increase their market share whilst cutting down on costs.

Through a merger, the business founder can take a step back from the business with the reassurance that it still has the potential to grow; your departure doesn't have to mark the end of the business!

If you think joining forces with another company is your ideal exit strategy, you should work on building positive relationships with companies that complement your business.

Initial Public Offering (IPO)

An Initial Public Offering is the process of selling shares of your business to the public. In other words, transforming your business from private to public. People who buy shares are then able to make money from the company’s growth.

This method helps the business to raise funds, and has famously been used by companies such as Meta, Airbnb and Tesla. The money raised goes directly to the company as well as early investors, so presenting an IPO as your exit strategy may increase your chances of receiving investment in the first place.

Despite its attractive qualities, this isn’t an easy strategy for startups. Investors often avoid investing in companies that lack credibility and pose a risk of financial loss. If an IPO is your desired exit strategy, you need to work to improve your business growth to prove to the public that you’re worth their investment.


Liquidation refers to the process of distributing a business’ assets at the end of its life cycle. This occurs when the company is reaching its end - typically when it can no longer afford to operate or when no one else is able to take over as you depart.

Be it voluntary or forced, it’s a quick and easy way to close up a business. However, the returns on this strategy are often low (particularly if you have to pay off creditors first), so it should really be used as a last resort option.

Management Buyout (MBO)

Management Buyout is the process of existing management or employees of the business acquiring the majority (if not all) of the company.

This is a quick and reliable way to pass on the business to people who understand the business goals and have extensive experience and knowledge of the business’ operations.

Knowing your business has been passed onto safe hands makes exiting the business an easier process with less due diligence required.


As far away as an exit may seem for a startup, entrepreneurship is a volatile process and circumstances can change at any point. As the business progresses, your exit plan might change, but that doesn’t mean that planning ahead isn’t essential!

A solid exit plan can help business owners to maximise their capital upon exiting and ensures that the business is passed on/closed in the most desirable manner.

If you don’t plan ahead, you may not be directing your business toward your desired outcome. For example, you may end up selling unexpectedly for far less than you would had you planned ahead and drove up your business valuation.

Beyond the future benefits, having a strong exit strategy has benefits for the here and now. If you’ve included an exit strategy in your business plan, it suggests to investors that you’re serious about your business goals and gives them an idea of exactly when they’ll see a return on their investment. Thus, if you plan ahead, you’ll be more likely to impress investors and raise funds at an early-stage.


Here at Jump Accounting, we're more than just your accountant. Our special advisory services will help you to understand the various routes your business can take and what exit strategy is best for your goals.

If you'd like to learn more about what exit strategy is best for your startup, get in touch with our team!


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