Most entrepreneurs focus on building their companies, but few think about how they’ll leave them.  

Whether your exit is five months away or five years out, understanding your options gives you leverage - so you can move on your terms, not someone else’s.

So, what exactly is an “exit”?

While you might imagine cashing a check and walking off into the sunset, an exit is really just a transfer of ownership (full or partial) in exchange for cash, stock, or some other value.

That transfer might be:

• Full and final, like selling 100% of the company to a buyer.
• Partial, like selling a portion of your shares while keeping some upside.
• Gradual, like setting up an employee ownership plan that transitions control over time.
  

Every exit comes down to three trade-offs:

• Liquidity: How much value you’re taking off the table.
• Control: Who gets to steer the company going forward.
• Value and timing: The market value of your business at any given point.

Exit options you need to know

When it’s time to plan your exit - or even just explore what’s possible - there are a few common paths. Each has its own strengths and risks. 

Here’s what they look like in practice.

Sell your company to a strategic or financial buyer

Most private businesses exit through an acquisition. Sometimes it’s a large corporation buying the company for strategic reasons, other times, it’s a financial buyer.

Benefits:

• Acquisitions tend to be the fastest way to turn equity into cash
• Competitive sale processes (multiple buyers) can drive up valuation.
• If structured well, you can minimize earn-outs and maximize upfront cash.

Things to consider:

• Change of control: Selling your company can mean handing over the reins entirely. While that might be exactly what you want, some entrepreneurs can find it emotionally challenging.
• Tax and liability considerations: Whether you structure your acquisition as an asset sale vs. a stock sale can meaningfully affect your net proceeds, ongoing liabilities, and administrative complexities.
• Strategic or financial buyer: A strategic buyer might offer the best value, but financial buyers can move faster. 

Convert some of your shares to cash

Exits aren’t all-or-nothing. In many cases, you can sell part of your stake to new investors and keep the rest. This is common in growth or late-stage funding rounds, also known as a secondary transaction.

Benefits:

• Diversifies your wealth by exchanging shares for cash
• Allows you to access some liquidity while staying invested in the future upside.

Things to consider:

• Valuation: You’re negotiating at a single price point, which may not reflect the value you would get in a competitive process.
• Signaling risk: If you frame it poorly, investors might think you’re cashing out or losing conviction.

Pass the torch through a management buyout (MBO)

Sometimes, the right buyer is already in the building. In a management buyout (MBO), the leadership team purchases the business - often with a mix of financing and outside capital.

Benefits:

• Preserves company culture and management continuity.
• Rewards loyal managers who helped build the business.

Things to consider:

• Securing financing: Financing can be tough - management teams often need a mix of their own cash, debt, and investors to pull it off. 
• Potential lower valuations: You might not get the price that a strategic or financial buyer would pay. You could be trading some upside for peace of mind. 

Access liquidity without giving up future growth

 For a profitable business with growth potential, a private equity recapitalization might be your sweet spot. A PE firm comes in, buys a majority or minority stake, and provides capital for the next growth phase.

Think of it as a “second bite at the apple,” as some call it. You take some liquidity today, stay on to help grow the company, and potentially sell again at a higher valuation later.

Benefits:

• Take liquidity now and stay invested.
• You get institutional resources - board support, tested operational playbooks, talent networks.
• Potential for a higher valuation at the next exit if the company grows.

Things to consider:

• Change in governance: You’ll have formal reporting and board oversight.
• Loss of control: PE firms have a defined exit timeline - usually another sale, sometimes to a strategic buyer or IPO.
• New financial terms: Terms can include preferred equity with liquidation preferences, affecting your ultimate payout.

List on a public exchange 

Going public unlocks capital and liquidity for everyone - but it’s expensive, slow, and heavily regulated. 

Entrepreneurs often look at an initial public offering (IPO) as the ultimate achievement, but it’s also the most complex path, demanding early preparation around governance, financials, and compliance. You’ll need to choose the right exchange to list on, which should factor in listing requirements, liquidity, valuation potential, and alignment with strategic growth markets and investors. 

Benefits:

• Unlocks large pools of capital.
• Creates a liquid market for shares.
• Raises brand credibility and attracts talent.

Things to consider:

• An IPO process can be costly: Bankers, legal teams, and outside consultants will need to be hired to help with the process.
• Short-term scrutiny: Companies that go public are then subject to quarterly reporting pressure.
• Pricing volatility: As a public company, valuations are set throughout the day, which impacts your share value and net worth.

Which path is right for you?

No matter which exit you’re considering, a few factors deserve early thought:

• Your fundraising journey shapes what you actually take home. High valuations and stacked liquidation preferences can shrink your payout, while a clean cap table and disciplined fundraises can create more upside.
• M&A windows and valuations rise and fall with economic cycles, making timing an important factor in when you choose to sell.
• Your deal structure matters just as much as the headline price. When comparing options, you should consider the full package of terms and conditions to realize what will be best for you and the business.
• Keeping your business in good hands. While a strategic or financial buyer may present the best offer, your legacy may be better preserved by selling to management
• Tax planning is often treated as an afterthought, but proactive planning can save you meaningful money. Connecting with a tax professional before you’re having serious buyer conversations can help you make the right decision.

The key to getting exit-ready early 

You don’t have to be planning a sale to prepare for one. Companies with the best outcomes are ready long before they go to market.

That means organized financials, a clean cap table (while maintaining enough ownership), and a well-organized data room. It also means establishing governance frameworks and compliance practices early on so you can move through the transaction smoothly.

Zest makes exits easier and cleaner. Whether you’re exploring a secondary sale, preparing for acquisition, or handing the reins over to your team, we help you clean up your cap table, organize your stakeholders, and execute your transaction smoothly,  so you can exit with confidence and focus on what’s next.