Week 8 Assignment: Exit Strategies (CO8, ILO.B.SK.2, SK.3, BIS.1)Evaluate which of the exit strategies discussed in this week’s lesson would be the most appropriate for the business you are considerin

Evaluate which of the exit strategies discussed in this week’s lesson would be the most appropriate for the business you are considering and explain why. Include in your explanation why the other exit strategies would not be appropriate.

Please review attached assignment rubric

Include a minimum of two scholarly sources (in addition to the textbook)

Written paper at least 3 pages

Format your paper according to APA guidelines

Types of exit stratgies

Types of exit strategies

Robbins (2005) suggests that one of the most common exit strategies involves being acquired by another company; in the past 20 years, this has occurred at record pace. Being acquired by another company simply means that your company becomes a part of another company usually in some form of a buy-out type of arrangement.

Robbins (2005) also discusses four other exit strategies:

1. The Modified Nike Maneuver: Just Take It

This is a strategy where an entrepreneur pays themselves very well and enjoys a comfortable lifestyle, with little thought given to being a supernormal growth company.

1. The Liquidation

While not a popular exit strategy, liquidation is often the strategy that many businesses end up taking. Just like it sounds, this involves selling off the assets, satisfying the creditors and dividing up any reaming monies between the shareholders, or equity owners of the business. There may be some atypical businesses where this could be a desirable strategy, but often it is not and just the only option left.

1. Selling to a Friendly Buyer

This would involve a sale to someone you already know, a customer, an employee, your children or other relatives. This usually involves someone who has already expressed an interest and would be likely to preserve your legacy.

1. The IPO

Probably the dream of many an entrepreneur is to go public, and reach the movie star like status of Bill Gates of Microsoft or Mark Zuckerberg of Facebook, but the sad truth is that it is rare for a start-up to end up as a publicly traded company, especially in the last few decades. In the United States the number of publicly traded companies is declining, with the number falling from 8,000 in 1996 to 4,100 in 2012. This decline results from less companies deciding to go public due to the possible aversion to the extensive reporting requirements which have been further complicated by the enactment of changes in the NASDAQ listing requirements in 1996, the Sarbanes-Oxley Act of 2002, and the Dodd-Frank Wall Street Regulatory Reform Act of 2010. While all of these help to protect consumers, they make the life of a publicly traded company far more complicated and expensive. Some credibility is given to the idea that the increased rate of acquisitions or mergers during this time would logically lead to less companies being publicly traded. Finally there were also a number of companies that withdrew from publicly traded status or went private, like Dell Computer did in 2013 and some have the unfortunate experience of being delisted when they no longer meet the requirements (usually financial) for the exchange they were trading on (Doidge, Karolyi and Stulz, 2015).

Bell (2007) suggests a sixth exit strategy, the franchise, which he calls a replication concept achieved by licensing the business idea to others for an initial fee and often commissions on sales into the future, depending upon the type of franchising agreement used. Franchising has created many millionaires on both sides of the transaction. Franchise Direct lists the top one hundred franchises, which show that a variety of businesses can be successful as franchises. Restaurants are popular choices, with the top five on the list being eateries, but the list goes on to include hotel chains, real estate companies, auto-related industries, cleaning companies, and gyms.

Managing the post funding relationship