Given such financial threats, every organization needs to have a strong exit strategy, which offers an opportunity for the investors to recover ensured money from the business. Pet’s Planet had to develop an exit strategy that maximizes the business’s growth potential and offers a justifiable return on investment (ROI) for the shareholders. For the most part, leave procedures can be arranged into selling the organization and selling out of value. Leave procedures include consolidations, key acquisitions, and initial public offerings (IPOs). Which type of exit strategy would be utilized would depend on where the firm is at the stage and its potential profit.
One exit strategy for Pet’s Planet could be to sell the business to a larger company in the pet food industry. The advantage of a unique selling point in conceiving tailor-made handmade food for pets could represent an attractive value proposition to be considered by a larger company that wants to widen its business lines. Another option would be diluting the equity and bringing in other investors to boost the business further. This strategy entails that some existing shareholders sell off some of their equities and, hence, a fraction of the business to get extra capital. The success of this strategy would depend on the vast business growth potential and the ability to generate a return for the investors.
Pet’s Planet can also emerge with any company in the same pet industry. Merger with a company in the pet industry would lead to synergy and complement each other by sharing available resources for the growth and expansion of Pet’s Planet (Kim & Kim, 2021). This will allow the shareholders to liquidate their investments and have employees pocket considerable profits.
A strategy for Pet’s Planet could be going public through an initial public offer. This could infuse the business with substantial capital to raise, which could be used to expand the business and give the shareholders a very high return (Strine & Smith, 2020). However, changes cannot be an option for Pet’s Planet as it is a small business within the pet industry, and costs incurred through the IPO route may need to be sufficiently justified.
Whatever an exit strategy is, Pet’s Planet will have to ensure being in a solid financial status with promising future growth prospects and capable of generating adequate funds return on the investments. Developing a comprehensive and concise business strategy in terms of the roadmap for growth and expansion will be an integral component of any exit strategy. An essential entry towards an exit strategy envisages consideration relating to the timeline and stage of business. Since Pet’s Planet is a new start-up company, whatever exit strategy is used would take several years to carry out the transaction since, first, the business needs to situate itself in the market, expand its customer database and begin producing profits.
The exit strategy of Pet’s Planet should also consider what the business is valued at. The valuation of a business might be credited to different factors, for example, income growth, profitability, market share, and degree of competition (Rounaghi et al., 2021). Therefore, it is essential to determine whether the business’s value corresponds with what it expects.
There is another critical factor: it is imperative for the parties involved to confirm who the buyers will be for Pet’s Planet. A potential buyer, for instance, is a pet food company that would like to diversify its product offering. Identification of the needs and preferences of potential buyers will help Pet’s Planet position itself attractively on the platform to attract the right buyer. Another critical consideration that needs to be looked upon by Pet’s Planet is the effects of the way they choose to exit towards business continuity and customers. The choice of the exit strategy by Pet’s Planet should not reflect any negative impacts on the operations, reputation, and customers of the business.
References
Kim, S., & Kim, A. (2021). Going Viral or Growing Like an Oak Tree? Towards Sustainable Local Development through Entrepreneurship. Academy of Management Journal, 65(5). https://doi.org/10.5465/amj.2018.0041
Rounaghi, M. M., Jarrar, H., & Dana, L.-P. (2021). Implementation of strategic cost management in manufacturing companies: overcoming costs stickiness and increasing corporate sustainability. Future Business Journal, 7(1), 1–8. Springeropen. https://doi.org/10.1186/s43093-021-00079-4
Strine, L. E. J., & Smith, K. M. (2020). Toward Fair Gainsharing and a Quality Workplace for Employees: How a Reconceived Compensation Committee Might Help Make Corporations More Responsible Employers and Restore Faith in American Capitalism. Business Lawyer, 76, 31. https://heinonline.org/HOL/LandingPage?handle=hein.journals/busl76&div=6&id=&page=
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