How to plan an exit strategy for a business
Choosing the right business exit strategy depends on your goals, business performance, and market conditions. Whether you're planning an IPO, a trade sale, or a succession, having a clear exit strategy in place can increase your business’s value and improve operations in the lead-up to a sale.
Two common exit strategies for business owners
1. The IPO exit strategy
An initial public offering (IPO) is the process of selling an equity stake (shares) of a private company to the general public in exchange for cash - this is also known as “going public”. An IPO exit strategy allows business owners to raise funds for future growth or realise profits from their investment.
The IPO process typically includes:
- Select an underwriter – companies will need to choose an investment bank to underwrite the IPO – they advise on how to take the company public and act as a guarantor for any unsold shares.
- Due diligence check – the process of assessing the company to highlight potential business risks.
- Submit regulatory fillings – various documentation and paperwork is required by the regulator e.g. a letter of intent or prospectus.
- Promote the IPO – an opportunity to sell the investment offering to institutional investors to generate interest and gauge the demand for the shares.
- Valuation – providing the IPO is approved by the regulator, the price of the shares is set. The valuation will depend on investor demand and the strength of the company’s financial position.
- Offer period – the process of selling the shares begins, where investors can purchase the shares prior to floating on the stock market. This is known as “getting in on the ground floor”, or the primary market.
- Shares go public – the first day of trading on the stock market, or the secondary market, where investors can meet (electronically) to buy and sell the shares freely.
While IPOs can unlock significant value, they are complex and costly. Underwriting fees alone can range from 4% to 7% of proceeds. For example, Deliveroo’s 2021 IPO cost $57 million in fees. Founders may also face restrictions on selling their shares post-IPO, and the process can take 6–12 months.
Only around 20% of IPOs are considered successful, making this a high-risk, high-reward strategy.
2. The trade sale exit strategy
A trade sale exit strategy is where one company is sold to another - typically operating within the same industry or sector. It's one of quickest ways to realise the sale price for a business, with less obstacles to climb when compared to IPOs. A trade sale is generally for the full sale of the business, so it’s better suited to business owners who’re looking to sell-out entirely in one fell swoop.
Business brokers and acquisition intermediaries are normally the first port of call to help execute a trade sale. They’ll have a bank of contacts, including other brokers in different areas, to find a potential buyer. It’s like appointing an estate agent to advertise and sell your home. A trade sale can complete in a matter of weeks or months if the right buyer is found and negotiations go well.
What makes a company attractive to trade buyers?
Ultimately, trade buyers or equity-backed companies are looking to expand their market share and gain a competitive advantage. Strong business performance, an established market share, with strong brand and reputation are the types of attributes and characteristics potential buyers are looking for.
Preparing a well-scripted selling memorandum is an important way to spread the word about your business and advertise its unique selling points to a prospective buyer.
Read more: Why do business owners need an exit strategy?
Other exit strategies to consider
Beyond IPOs and trade sales, other exit strategies for businesses include:
- Succession planning – passing the business to a family member or heir.
- Management buyouts – selling to your existing management team.
- Mergers and acquisitions – combining with another company for strategic growth.
Each strategy has different implications for capital gains taxes, business continuity, and long-term planning.
Download our latest report on Exits in the UK
Our latest report as part of the Fortune Favours series focuses on Business Exits in the UK.
This report explores the landscape for business exits, investigates the trends affecting IPOs and M&A activity, along with a summary of recent innovations that could bring new liquidity to the private company market.
Whether you are preparing for an exit, investing in the next wave of innovation, or simply seeking to understand the market, we hope you find this report useful.
Working with Charles Stanley
Exiting a business in today’s dynamic market is more than just a milestone – a strategic process that requires foresight, planning, and expert guidance. Whether you're just starting out, scaling up, or actively preparing for an exit, engaging with a trusted adviser like Charles Stanley at any stage of your journey can make a meaningful difference. Early conversations can help you structure your exit in a tax-efficient way and preserve the value of what you've built. While ongoing support brings clarity, confidence, and control to every decision, empowering you to move forward with confidence.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
Report: Exits in the UK 2025 – Selling Up, Not Out
Exit activity surged in 2021 as the market rebounded from pandemic-era uncertainty as low interest rates and government stimulus measures created favourable conditions. But what does the current landscape for exits look like? Read our report to understand the recent trends and analysis of business exits.
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