Exit Strategies for Entrepreneurs: A Practical Guide

Last Updated on August 14, 2025 by Ewen Finser

If you’re thinking about an exit in the next 6 to 36 months, let’s talk about the big picture and the trade-offs of different strategies. As a CPA, I’ve helped many small business owners sell their business, and help them figure out what the business is worth, so I’ve ran into a whole bunch of different strategies to help business owners get what their business is worth. There are many main exit paths, and it’s imperative to know when they fit and what to watch for.   There are also non-traditional ways to value and sell your business, and that’s where an online broker may fit in. More on that later, though.

The Options at a Glance

What are the 8 Best Exit Strategies?

Below, each strategy includes pros and cons so you can identify what may work best for your situation.

1) M&A (Sell the Company to a Strategic or Financial Buyer)

You sell the whole business, assets, or stock, to a buyer who wants your market, product, brand, or cash flow. This is the most common “maximize value” exit for growing firms.

Pros

• Often, the highest total value if you have growth, IP, or strategic fit.
• Clear closing event; you can have a clean exit date or roll some equity.
• Competitive bidding can lift prices if you run a process.

Cons

• Heavy diligence; deals can fall through if the buyer is not committed to following through
• You may accept earn-outs or post-sale targets.
• Structure matters: buyers prefer asset sales; sellers often prefer stock sales for tax and simplicity.

Quick note on asset vs. stock sale: Buyers favor asset deals for a “fresh” asset basis; sellers favor stock deals for cleaner transfer and potential tax outcomes. Make sure to consult with a realm of professionals, such as lawyers and CPAs, to ensure you have a clear understanding of buying / selling a business.

2) Sell Your Stake to a Partner or Investor (“Friendly Buyer”)

With this method, you sell your shares or interest in the business to an existing co-owner or a known investor. It’s fast and keeps operations steady.  This speeds up the process and lowers disruption when the buyer already knows the business.

Pros

• Minimal disruption to customers and staff.
• Shorter diligence; lower transaction costs.

Cons

• Price may be lower than a broad market process.
• Works only if a partner wants and can afford your stake in the business.

3) Family Succession

Family succession is one of the oldest plays in the book. Basically, you pass the business to a family member. It preserves legacy but needs real planning, training, and governance. Many a business have been sunk because the parents were excellent business owners, and the children wanted nothing to do with the family business.

Pros

• Continuity of culture and relationships.
• You can step back into an advisory role.

Cons

• Successor readiness is the main risk; you have to ensure that the successor actually wants to and is fit to run the business.
• Estate, tax, and governance design take time.

4) Acqui-hire

The buyer wants your team more than your product. This is common in tech and other talent-scarce fields, and is especially prevalent in AI. Expect a smaller headline price and a defined employment period.

Pros

• Fast path for teams with in-demand skills.
• Gives employees continuity and upside at the acquirer.

Cons

• Lower valuation than a traditional M&A exit because only the talent is being purchased, and not the assets or stock.
• Product often sunsets post-deal.

5) Management or Employee Buyout (MBO/MEBO, including ESOPs)

Your managers, and sometimes employees, buy the company using a mix of bank debt, seller financing, or ESOP structures. It keeps the business independent and rewards the people who built it. This is one of my favorite because the people running the business have real skin in the game and want to ensure that it is successful and profitably ran.

Pros

• Continuity for customers and staff; they may not even be aware a buyout occurred
• Strong cultural fit and smoother handoff.
• ESOPs can unlock meaningful tax and retirement benefits when used correctly.

Cons

• Financing can be complex, especially if management or the employees don’t have much capital.
• Price may trail a hot strategic sale.
• Governance and fairness must be clear.

6) IPO

This one is a bit more rare in small business, but it still exists. In this buyout method, you take the company public to raise capital and offer liquidity to shareholders. IPOs bring prestige but also high cost, scrutiny, and ongoing reporting. You’ll need an expensive team of accountants, auditors, and lawyers to make going public feasible.

Pros

• Access to public capital and higher profile.
• Liquidity path for investors and employees who own stock.

Cons

• Expensive to execute; costly to maintain.
• Market windows open and close; timing risk is super important to consider.

7) Orderly Liquidation

When no other strategy comes to mind, this is often the strategy of last resort. Essentially, you close the business and sell assets. It’s a clean exit when there’s no buyer for the going concern. Recovery often equals asset value only; goodwill is lost. It’s also always sad to see a business that was doing well close it’s doors because there’s no interested buyers in the small town that it thrived in, for example.

Pros

• Fast and simple.
• Clears debts in order of priority.

Cons

• Lowest return; brand equity is gone.
• Disruption to employees and customers.

8) Bankruptcy (Chapter 7 or Chapter 11)

Chapter 7 liquidates the business and is typically a last resort. Chapter 11 reorganizes debt so the business can keep operating and pay creditors over time (including streamlined options for small businesses). This strategy is used only when necessary and with counsel.

Pros

• Can discharge or restructure debts.
• Chapter 11 can preserve going-concern value.

Cons

• Stigma and credit impact.
• Equity holders often recover little or nothing.

Non Traditional Exits – Online Brokers

If you choose to sell the company (full or partial), a specialized online broker can improve the result. You don’t have to spend your time shopping around and valuing the business – the online broker can help with that. The broker’s job is to value the business, prepare the package, run a targeted buyer process, screen offers, guide diligence, and close. I’ve used Quiet Light in the past, as one example, and they emphasize data-driven valuations, packaging, and a broad buyer network; they also offer free, no-pressure valuations so you can decide if the timing makes sense.

When an online broker helps most

• You want multiple bidders and clean terms, and don’t want to spend your time sifting through mounds of paperwork
• You need help documenting add-backs and normalizing SDE/EBITDA.
• You prefer a structured process with NDAs, buyer screening, and managed diligence.

When you might go direct

• A partner buyout or family transfer with a pre-negotiated price. This is best case if you want to hand the business over to someone you’re already familiar with and trust.
• An acqui-hire led by a known acquirer.

Even then, a broker’s valuation and prep checklist can surface value gaps before you commit, ensuring you get the most out of the business that you’ve worked hard to build.

Choosing your path: quick decision guide

• Max value, strong growth, or moat? Start with M&A and talk to a broker; test buyer’s appetite to see if your business is in demand.
• You’re one of several owners? Explore a partner/investor buyout; it’s faster but may price lower.
• Legacy matters? Train a successor and build a governance plan for family transfer. Be extra careful with this option, though.
• Your team is the prize? Consider an acqui-hire and negotiate retention economics.
• Keep it “in the house”? Model an MBO/MEBO or ESOP with financing and valuation support so that key stakeholders can maintain control of the business.
• Large and still scaling? An IPO is an option if you can carry public-company costs.
• No buyer, asset-heavy? Liquidation can be clean and quick, though value is limited, and closing the doors of a locally loved business can carry negative implications.
• Distressed? Ask counsel about Chapter 11 vs. Chapter 7 and any small-business provisions.

What Are the Steps of Engaging with an Online Broker?

1. Baseline valuation
   First, you’ll share your P&L, balance sheet, traffic, and channel data, and owner time. A good broker will estimate value in the first conversation and explain key levers (SDE, add-backs, growth, risk). As an example, Quiet Light publishes guides on methods used for online businesses.
2. Fix the value leaks
   Most businesses can add value in 60–120 days by cleaning financials, sharpening documentation, diversifying channels, and reducing owner dependency (all things that a good CPA can help add value to). Brokers will outline a punch list.
3. Pick deal structure early
   Decide if you prefer an asset or stock sale and how much you’ll accept in earn-out vs. cash at close. Buyers favor asset deals; sellers often prefer stock deals. Get tax and legal advice before you launch.
4. Go to market
   Your broker builds the prospectus, screens buyers, and manages NDAs and Q&A. For example, Quiet Light positions listings to highlight strengths and handle diligence in an orderly timeline.
5. Negotiate and close
   Compare offers on price and terms (escrow, holdbacks, non-compete, transition). A broker keeps momentum and coordinates closing documents.

Risks to Manage: A Cautionary Tale

• Documentation debt. Sloppy books and weak SOPs hurt value and slow diligence. A broker or advisor can help you fix this before launch.
• Concentration. Heavy reliance on one customer, supplier, or channel will push down multiples as buyers see this as a risk.
• Owner dependency. If the business “is you,” expect lower offers or longer transitions.
• Structure and tax. Asset vs. stock choice and earn-outs have big tax and control effects. Make sure to consult with counsel so that you’re not unnecessarily adding tax liabilities.

Closing Thoughts on Selling Your Business

You have eight proven exit paths. The “right” one depends on growth, cash flow, legacy goals, and timing. If you’re leaning toward a sale, a quality online broker like Quiet Light can help run a disciplined process, widen the buyer pool, and keep diligence on track. Start with a low-friction prep plan and remember that you retain control over when you sell. Only you will know when the time is right, and what the best method would be for you!