Exit Strategies for SMEs

Often times, the end is as important as the beginning, and having a clear focus about how you want things to pan out helps in the overall approach. To some, having a clear exit strategy at the start of a business may seem too far fetched, but venture capitalists and investors think otherwise.

It has been seen that small and medium enterprises which have a clear exit strategy to start with have a better chance of attracting the kind of investors they are looking for; reason being- everyone is happy to know how much would they get back if they put in their money.

Each exit strategy has its own advantages and disadvantages, and the onus really lies on the vision of the the business owners.

As one of my CEO friends puts it, “IPO is the most glamorous of all exit strategies for a business, be it a SME or otherwise, but it is not always advantageous. Sure, launching the IPO means free publicity for the business, but there is a lot of unpredictability attached to it. In my personal experience, IPOs are the most favorable exit strategies for SMEs.”

He further adds, “The cost involved for launching IPOs is huge, and small businesses often find it difficult to stay afloat, even after launching a moderately successful IPO. But then again, it depends on the exact situation of the business and the vision of the management”

Perhaps that's the reason why mergers and acquisitions (M&A) are the most popular when businesses look for exit strategies. M&A is the easiest route for a business to exit, as the only prerequisite to it is to find larger businesses which are ready to acquire and expand.

Page 12

Our Achievements

• Winner of appreciation award for promoting SMEs in India.
• 1st ever Indian magazine to penetrate tier II, III cities & the rural belt.
• Industry Partnerships include CII, FICCI, ASSOCHAM, PHDCC, AIMA, ITPO, SME Network, Federation of Indian Micro Small Enterprises (FISME)
• Official Magazine Partners for several national & international MSME events.

The Last Word

More Learned than Educated, You were!

I was speechless. Rather hesitatingly I asked him, “So, what have you decided, Sominder ?” His reply was curt and candid, “I have told the doctors that I don’t want to live life as dumb. Only...

Contribute

You can also write for SME WORLD

We are looking for writers and experts to contribute original stories and articles. Send an email to smeworld@gmail.com with your story idea and lets get talking.