Leaving a business you’ve built is a monumental decision and having the right exit strategy is critical to making it a successful transition.
As an advisor guiding business owners, you need a resource that clearly explains their options. Consider that roughly 50% of small business owners in countries like the U.S. are over age 55, fueling a wave of retirements and business sales in the mid-2020s.
At the same time, over 75% of owners intend to exit within the next decade, yet most lack a written plan.
This planning gap often leads to lower valuations, chaotic sale processes, and even regret, in fact, about 3 out of 4 owners “profoundly regretted” selling their business within a year of exit.
The good news? With proactive planning, those outcomes can be avoided. There are many exit routes available, from selling to a competitor or handing the reins to family, to more complex strategies like employee buyouts or going public.
The best strategy depends on an owner’s goals, timeline, business size, and risk tolerance.
Below, we’ll break down the top 10 business exit strategies for 2025–2026 and how to choose the right one.
For quick reference, the comparison table summarizes each strategy’s typical timeline, relative risk, and potential payout value to the owner.
To set the stage, here’s a side-by-side look at how the major exit options stack up:
| Exit Strategy | Typical Timeline | Risk & Complexity | Exit Value Potential |
|---|---|---|---|
| 1. Strategic Sale (M&A) | Medium (≈6–12 months) | Moderate | High – often highest price due to synergies |
| 2. Financial Buyer (Private Equity) | Medium (≈6–12 months) | Moderate | Medium–High – strong if business is attractive |
| 3. Initial Public Offering (IPO) | Long (1–3+ years prep) | High | High – can be maximal if successful |
| 4. Family Succession | Very Long (5–10+ years) | Moderate | Low – little immediate cash, legacy focus |
| 5. Management Buyout (MBO) | Medium (≈6–12 months) | Moderate | Low–Medium – often a discounted sale |
| 6. ESOP (Employee Ownership) | Medium (≈6–18 months) | Moderate–High | Medium – fair market value, with tax benefits |
| 7. Merger with Another Company | Medium (≈6–12 months) | Moderate | Medium – value realized over time in combined entity |
| 8. Partial Sale / Recapitalization | Medium (≈6–12 months) | Moderate | Medium – some cash now, more later if growth |
| 9. Partner/Co-Owner Buyout | Short–Medium (varies) | Low–Moderate | Medium – fair value via buy-sell agreement |
| 10. Liquidation (Close & Sell Assets) | Short (a few months) | Low | Low – usually minimal asset value only |
Timelines are approximate and assume the business is prepared for sale. Actual durations can vary, for instance, the average time to sell a small business is around 7 to 9 months.
Risk refers to the complexity and uncertainty of completing the exit; valuation potential indicates the typical financial outcome for the owner (e.g. an IPO or strategic sale might yield a higher price than an internal transfer or liquidation).
Now, let’s dive into each strategy in detail:
A strategic sale involves selling your business to a competitor or larger company in your industry. This approach often yields the highest valuation because strategic buyers see synergistic value in your business – whether through expanded market share, acquiring your customer base, or integrating your technology.
Pros: Strategic sales typically offer the highest valuation due to synergies, provide immediate liquidity, and result in a clean exit where the buyer assumes 100% ownership.
Cons: You lose complete control, potential culture clashes may occur, and earn-out provisions might create uncertainty about final compensation.
Best for: Business owners prioritizing maximum value who are comfortable completely relinquishing control of their profitable business.
Private equity firms and other financial buyers purchase businesses primarily for investment returns rather than strategic synergies. These mergers and acquisitions often allow owners to retain minority equity while partnering with experienced investors to grow the business further.
Pros: Offers partial liquidity with potential for a "second bite of the apple," brings growth capital and expertise, and can provide attractive multiples for well-run businesses.
Cons: Requires alignment with the buyer's 3-7 year exit timeline, involves giving up majority control, and may not suit smaller businesses.
Best for: Profitable businesses with growth potential where owners are open to staying involved during the transition period.
An initial public offering represents the pinnacle of business exit strategies, allowing companies to sell shares to public investors on stock exchanges. While potentially offering maximum valuation, IPOs require significant scale and preparation.
Pros: Can provide the highest company valuation, offers ongoing liquidity through public markets, and brings prestige and access to capital for growth.
Cons: Extremely complex and risky process, requires substantial revenue and momentum, involves ongoing regulatory requirements, and doesn't provide immediate full exit for owners.
Best for: Large, rapidly growing companies with tens of millions in revenue, typically in technology or biotech sectors, where owners are willing to continue under public scrutiny.
Many business owners dream of keeping the business in the family by transferring ownership to a family member. This succession plan prioritizes legacy over immediate financial gain and requires extensive long term planning.
Pros: Preserves family legacy and company culture, maintains privacy, and can strengthen family wealth across generations.
Cons: Provides no immediate liquidity, faces low success rates (only 30% of family businesses survive to the second generation), and may not maximize market value.
Best for: Owners whose primary goal is maintaining family control across generations, with competent and interested family members ready to take over.
A management buyout involves your existing management team purchasing the business. This approach ensures operational continuity since the buyers already understand the company intimately.
Pros: Provides business continuity, maintains company culture, offers relatively quick closing once financing is arranged, and rewards loyal employees.
Cons: Often results in lower valuations due to financing constraints, creates credit risk if owner financing is involved, and requires a capable management team with acquisition interest.
Best for: Companies with strong management teams where owners value smooth transitions over maximum sale price.
An ESOP creates a trust that gradually purchases shares from the owner and allocates them to employees, effectively making workers the new owners. This business exit strategy offers significant tax advantages while rewarding your workforce.
Pros: Provides substantial tax benefits, boosts employee morale and retention, keeps the company independent, and allows gradual exit options.
Cons: Complex setup process, ongoing compliance requirements, caps sale price at fair market value, and creates future share repurchase obligations.
Best for: Stable, profitable businesses with 20+ employees where owners want to reward their workforce while achieving tax-advantaged liquidity.
Unlike an outright sale, a merger involves combining with another company as equals, where you typically retain ownership in the new combined entity rather than cashing out completely.
Pros: Creates a stronger combined company, allows partial exit with continued upside potential, and can provide easier internal messaging as a "merger of equals."
Cons: Involves complex organizational integration, requires ongoing involvement from the owner, and limits immediate liquidity compared to outright sales.
Best for: Situations where two complementary businesses are stronger together and owners want continued involvement in a larger enterprise.
This strategy involves selling part of your ownership to investors while retaining a significant stake. It's an increasingly popular approach that allows owners to diversify their wealth while maintaining involvement in business growth.
Pros: Provides immediate liquidity for wealth diversification, brings growth capital and expertise, and offers potential for higher returns on remaining equity.
Cons: Requires sharing control with new partners, involves betting on future business performance, and adds complexity to governance structures.
Best for: Owners seeking to reduce risk while maintaining upside potential, particularly those believing their business could be worth significantly more in the future.
For businesses with multiple owners, one partner's exit might involve selling their share to remaining partners. This internal transaction can be governed by existing buy-sell agreements.
Pros: Maintains business continuity, provides simpler transaction process, ensures confidentiality, and keeps ownership among trusted parties.
Cons: May result in below-market valuations, can strain partner relationships if negotiations sour, and requires remaining partners to have sufficient funding.
Best for: Small businesses with multiple co-owners where some want to continue operations while others exit.
As a last resort, liquidation involves shutting down operations and selling assets individually. While typically yielding the lowest returns, it may be necessary when no buyers are available for the ongoing business.
Pros: Offers simplicity and speed, provides full control over the process, and definitively ends all business commitments.
Cons: Usually generates the lowest value, results in employee job losses, and can feel like business failure to owners.
Best for: Situations where no better exit options exist or for very small, owner-dependent businesses with limited transferable value.
The ideal business exit strategy depends on your personal goals, business readiness, and current market conditions. Consider these key factors:
Effective exit planning isn't just about the endgame – it's a long term strategic process that can significantly impact your business's value and your personal wealth. Business owners who start their succession plan early, typically 5-10 years before their intended exit, often achieve better outcomes than those who wait. Market conditions, business performance, and personal circumstances can all influence which type of exit strategy works best for your situation.
Successful exit planning typically begins 5-10 years before your intended departure. Early planning allows time to increase business value, address operational weaknesses, and adapt to changing market conditions. Having multiple exit strategies under consideration provides flexibility as circumstances evolve.
Remember to build a strong transition team including certified exit planning advisors, M&A attorneys, and CPAs who can guide you through the complex process of transferring business ownership.
Whether you choose a strategic sale to maximize returns, family succession to preserve legacy, or any other approach, the key is starting your business plan early and remaining flexible as opportunities arise. Your exit strategy should align with your personal values and long term objectives, ensuring a successful transition that rewards your years of hard work building a valuable enterprise.
Learn the basics of exit planning.
Map your client’s exit timeline.
Share our exit readiness checklist.
Explore the exit planning glossary.