Foreign Business Exit Strategies
For a business to be successful in a foreign country, it is usually necessary to stay in the country for a length of time in order to build profits. Alternatively, business owners who want to achieve a quick profit can rely on an exit strategy. There are four common exit strategies that can be used by owners of a foreign business.
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Initial Public Offering
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An initial public offering occurs when a private company becomes a publicly listed company. This means that the company exchanges shares in the company for the equity of investors. The initial owners are then able to sell their own stock and leave the business if they wish. This is a good strategy for owners of a firm with a large presence in a foreign country, as long as the company is able to attract investors.
Selling to a Partner
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Selling a business to a partner is a good exit strategy if at least one partner wants to remain in the country to oversee the business. This allows the partners who want to get out to simply sell their stake in the company to the partners who wish to continue on with the business. This can work well if some of the owners are local or committed to living in the foreign country.
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Selling to an External Party
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Selling the business to an external party can be a good exit strategy if none of the current business owners wants to remain in the country. Of course, this strategy depends on there being a buyer for the business.
Merger
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A good exit strategy for a foreign-owned business is to merge with a local firm. By finding a local firm to merge with, it is possible for the foreign business owners to take a minority role in the new firm and allow the local firm to take over the management. The foreign owners can be compensated financially, issued stock in the new firm or a combination of both.
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