Startups are often built on a collection of short-term goals that focus on growth and milestones for success. However, just as important is considering the bigger picture and prepare for the long term by creating a startup exit strategy. Acquisition – a smaller business selling their company to a competing corporation – is commonplace, but it’s important to understand the are pros and cons for this approach. And if you have more questions after this guide, LawTrades can connect you to a quality, affordable startup attorney to help you plan for the future of your business.
Advantages of Acquisition
In many ways, an acquisition is a profitable solution. A smaller business could sell out to a much larger corporation that has the funds to pay a much higher price. In some instances, sellers can even opt to stay on with the business to as an administrator to help the acquisition process be a little smoother. Plus, larger corporations have usually mainstreamed the legal process since they have likely done this before. If done properly, an acquisition could be a great way to sell your business once the time is right and have a nice profit to walk away with.
Disadvantages of Acquisition
Sometimes, an acquisition can be complicated. For smaller businesses, it can be difficult to see your brand and identity bought up by a different entity that can restructure as they deem appropriate. This could lead to a total brand transformation and employees losing their jobs. Businesses that opt for acquisition as an exit strategy should be aware of the potential of this happening. Furthermore, you have to be able to attract a buyer, and there isn’t always a large corporation that’s interested and sometimes selling to a friendly buyer can mean less profit.
Is Acquisition Right for You?
Every business is unique. It’s hard to say for certain if this is the best exit strategy for all businesses, but it certainly is the right one for some. Your best option moving forward is to contact a skilled business attorney that can help you identify if the acquisition is your best option and how you should legally set up your business for the smoothest transition.
Hire a Startup Attorney
LawTrades is a marketplace of online legal services that is committed to helping startups with their legal issues. We offer services for all stages of business, and we’d be happy to do the same for you. Because startup law is multifaceted, you may need ongoing assistance. In addition to our regular service, we offer a subscription-based legal plan that allows you unlimited consultations, a $0 service fee plus drastically reduced hourly rates. We believe that quality legal help should be both affordable and attainable no matter the size of your business.