Most exit planning starts and ends with a trade sale. There are four routes an Australian founder actually has, and the right one depends less on the business than on what you want your life to look like afterwards.
Ask most business owners about their exit strategy and you get one of two answers. Either a shrug, or the word “sell”.
That is not an exit strategy. That is one route, and for a lot of founders it is the worst one available. It is just the only one anybody talks about.
Here are the four routes that actually exist, what each one does to the business, and how to tell which one you are ready for.
1. The trade sale
You sell the whole thing to a competitor, a bigger operator, or a buyer who wants what you have built.
This is the route everyone pictures, and it works. It is also the route with the sharpest edges. A trade buyer is buying your business to fold it into theirs, which means your brand, your systems and often your people are a means to an end. Earn-outs tie you in for two or three years, usually in a business that no longer runs the way you would run it. The number on the term sheet is rarely the number that lands in your account.
It suits you if: you are genuinely done, the business already stands on its own, and the cheque matters more than what happens next.
The catch: you only get to do it once, and you have to be at your strongest to get a good price. Most founders start looking when they are at their most tired, which is exactly when the leverage is gone.
2. The management buyout
Your leadership team buys you out, usually over time, usually funded by the profits of the business they are buying.
Culturally this is the cleanest exit there is. The people who built it with you own it. Nothing gets absorbed, renamed or gutted. Your staff keep their jobs and their manager.
It suits you if: you have a genuine second in command, the business throws off enough cash to fund the buyout, and you are prepared to be paid over years rather than at settlement.
The catch: it is slow, and it depends entirely on whether your 2IC is actually ready. Plenty of founders discover, three years into a handover, that the person they were counting on wanted the title rather than the risk.
3. The equity partner
You sell a stake rather than the business. Capital comes in, you take some money off the table, and you keep running the business with a partner who has skin in the same game.
This is the route that gets ignored, largely because it does not fit the story people tell about business ownership. You have not sold. You have not stayed the same either. You have swapped total control of a smaller thing for a share of a bigger one.
It suits you if: you still believe the business has another gear, you want to de-risk personally without walking away, and you would rather have help than have it all on you.
The catch: you now have a partner. Depending on the deal that can mean a majority partner, and you need to be honest with yourself about whether you can live with a board making the big calls. If you cannot, this route will make you miserable no matter how good the terms are.
4. The step back
You stay an owner and stop being the operator. Someone else runs it. You keep the equity and the dividends and you get your week back.
On paper this is the dream. In practice it is the route that fails most often, because it requires the business to be genuinely independent of you, and almost none are. If the business still runs on your relationships, your memory and your phone, you are not stepping back. You are going on holiday.
It suits you if: the business already has leaders who can hold it, documented systems, and revenue that does not depend on your personal reputation.
The catch: getting there is a two to three year build. Most people who want this route need to do the work of route two or three first.
How to tell which one you are ready for
Here is the uncomfortable part. The route is rarely a strategy decision. It is a readiness decision.
Ask yourself three questions, honestly:
- If you went away for three months, what breaks? Not “would it be hard”. What specifically breaks, and whose phone rings.
- What is your number, and where did it come from? If it came from a mate at a barbecue or a multiple you read about, you do not have a number. You have a hope.
- What do you want your Tuesday to look like in three years? Not your bank balance. Your Tuesday.
The answers usually make the route obvious. A founder whose business collapses in a fortnight without them does not have four options. They have one, and it is to fix that first.
That work is the same work either way. It’s what raises the price in a trade sale, makes a management buyout fundable, makes an equity partner interested, and makes stepping back survivable. There is no version of a good exit that skips it.
Which is why the best time to start is a long way before you want to leave.