Question 1

What are the realistic exit options for a business?

Accepted Answer

Fewer and less glamorous than the coverage suggests. The overwhelming majority of successful exits are **trade sales**, and several perfectly good outcomes are not exits at all.

**Trade sale (acquisition).** Selling to another company — a competitor, a customer, a supplier, or a larger business entering your market. **This is by far the most common exit**, and the buyer's motivation matters:

**Strategic buyers** pay for what the business does for **them** — market access, technology, a customer base, removing a competitor — and can pay more than the standalone value.

**Financial buyers** pay for the cash flows, usually a multiple of profit or EBITDA.

**Acquihire.** The team is bought and the product wound down. Modest outcomes, frequently structured so most value goes to employees in retention packages rather than to shareholders — which means it can look like an exit and return little to investors.

**Initial public offering (IPO).** Listing on a stock market. Rare, expensive, requiring substantial scale and governance, and it is a **liquidity event rather than an exit** — founders and investors are usually locked up for a period and sell gradually. It also imposes permanent reporting obligations and quarterly scrutiny.

**Secondary sale.** Selling shares to another investor without the company being sold. Increasingly common, and a genuine route to partial liquidity for founders during a long growth period.

**Management buyout**, where the existing team buys the business, usually with debt.

**Employee ownership trust**, which in the UK carries specific tax treatment and suits owners who care about continuity.

**The options nobody calls exits, which are frequently better:**

**Keep it and take dividends.** A profitable business paying its owners well for decades is a superior outcome to most acquisitions, and receives almost no attention.

**Hire a managing director** and step back, retaining ownership.

**Wind it down solvently**, taking the cash.

**What makes a business saleable:** not depending on the owner, documented processes, clean records, diversified customers, and recurring revenue. Building those takes years, which is why preparing to sell should start long before deciding to.

General information, not financial advice.

Question 2

What is a liquidation preference?

Accepted Answer

The right of certain shareholders — almost always investors — to be paid first when a company is sold or wound up, before ordinary shareholders receive anything. It is frequently the single most

Question 3

What is an earn-out, and why do acquisitions use them?

Accepted Answer

A structure where part of the purchase price is paid later, conditional on the business hitting agreed targets. It exists to bridge a disagreement about value: the seller believes the business will

Question 4

How do you close a business properly?

Accepted Answer

Through a formal process appropriate to the structure and to whether the business is solvent — and the distinction between solvent and insolvent closure determines everything, including whether

Question 5

Should you bootstrap or raise investment?

Accepted Answer

It depends far less on ambition than people assume and far more on whether the business has a structural reason to need capital before revenue — and on what you actually want the business to be. What

Question 6

What is crowdfunding, and what are the different types?

Accepted Answer

Raising money from a large number of people, usually online — and it covers four fundamentally different arrangements that share a name and almost nothing else. Choosing the wrong one is the most

Question 7

What happens when co-founders fall out?

Accepted Answer

Usually a slow deterioration rather than a single argument — and what determines the outcome is almost entirely what was agreed at the start, when everyone got on and nobody wanted to raise it. Why

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