Business Exit Strategy: Trade Sale, PE, MBO or IPO
A business exit strategy decides who buys before it decides the price. How owners and CFOs choose between trade sale, private equity, MBO, IPO and dual track.
Trade sale, private equity, MBO, IPO, dual track, recapitalisation, family succession and wind-down each bring a different buyer who prices the company differently.
A strategic pays for what your business adds to its own P&L, which is why two strategics bidding against each other often set the highest price.
A fund buys a majority, asks you to roll part of the proceeds into its structure, and pays you again when it sells the company.
Net debt, earn-outs, rollover and tax sit between the price you agree and the money that reaches your account on the day.
Route and structure about three years out, verifiable accounts from 24 months, and the sell-side advisor about 12 months before the sale.
A business exit strategy is the owner's plan for turning a stake in the company into cash. For a company worth EUR 10M to EUR 100M, the decision that matters is which buyer to sell to, because a listing is the narrow route and 2026 narrowed it further, with 24 US companies listed in the third quarter, against 65 a year earlier.
The route sets the buyer list, and the number of buyers who can compete for the company sets the price. Exit planning starts by deciding who belongs on that list, about three years before the sale. In sell-side M&A advisory, spectup acts for the seller and brings the buyers to the table.
| Item | Share of the company sold (0 to 100) | How long you stay (0 to 100) | Note |
|---|---|---|---|
| Trade sale | 95 | 8 | |
| Management buyout | 95 | 22 | Often a vendor loan: you stay a creditor of the business. |
| Trade sale with an earn-out | 95 | 50 | |
| Private equity with rollover | 70 | 82 | |
| IPO | 35 | 88 | Part sold at the listing, the rest under lock-up. |
| Minority sale or recap | 25 | 94 |
What should a business exit strategy include?
A business exit strategy settles five decisions, and each one moves either the price or the terms:
Who buys. A strategic acquirer, a financial buyer such as a private equity fund, your management team, or public-market investors.
How much is sold. All of it, a majority with a rollover (part of the proceeds reinvested in the buyer's structure), or a minority. A partial sale negotiates differently from a full exit, because the buyer is also buying you staying.
What you do after completion. Leave, stay through an earn-out (a slice of the price that depends on results after completion), or run the business for the new owner. Retention, your own role after closing, and what gets announced and when all sit in the offer next to the price.
When. Your own date, set against the buyers' appetite, the cost of acquisition debt and the last two years of your numbers.
What has to be true before the first buyer call. Accounts a buyer can verify, a team that runs without you, and a clean shareholder structure.
Decisions 2 and 3 narrow the field before price comes up. An owner who wants to leave on completion loses every buyer that needs someone to run the business, and many funds are among them.
Exit planning is the work that makes those five answers hold up in a buyer's diligence. It starts years before the sale, while there's still time to change what a buyer will find.
Types of exit strategy, compared
Every business exit strategy ends in one of eight routes, and each brings a buyer who prices the company on something different.
3 columns. Drag the table sideways; the first column stays put.
Route and buyer | What they price on | What the owner keeps or gives up |
|---|---|---|
Trade sale, to a strategic: competitor, customer or supplier | What the company adds to its own P&L | Usually sells all of it; part of the price may be an earn-out |
Sale to private equity, to a fund, usually for a majority | EBITDA, the debt the business can carry, the return at the fund's own exit | Rolls part of the proceeds over and gets a second exit when the fund sells |
Management buyout, to the management team, with bank debt and often a fund | What management can finance | Often lends part of the price back as a vendor loan |
IPO, to public-market investors | Growth, scale and listed comparables | Sells part at the listing, the rest later under a lock-up |
Dual track, to buyers and investors in parallel | A bid for the company, set against an investor's terms | Keeps the choice open until late in the process |
Recapitalisation or minority sale, to growth equity or debt investors | The growth plan and the cash flow | Takes money off the table and keeps control |
Family succession, to the next generation | What the family can finance or inherit | Often keeps a say and takes payment over years |
Wind-down: nobody buys the business, only its assets | Asset value | Keeps what's left after creditors are paid |
Management buyout, employee ownership and recapitalisation
A management buyout caps the price at what the team can finance with bank debt, a fund's equity and often a vendor loan from the owner, which leaves you a creditor of the business. Inside a sale process, a credible MBO bid is a floor outside buyers have to beat. spectup takes one on only when it sits close to a sell-side, buy-side or capital raising process it's already running.
Employee ownership is also a sale to insiders, with the owner's shares going to a plan or trust held for the employees. In the US that plan is an ESOP, as the IRS defines it; in the UK it's an employee ownership trust. Both are tax structures first, so they need specialist advice before they're compared on price with any other business exit strategy.
In a recapitalisation or minority sale, spectup can arrange the debt inside the same mandate as the equity.
Why do trade sales often pay the most?
A strategic acquirer often outbids a fund because it pays for revenue it can sell into, costs it can take out and gaps in its own offer it can fill, and a fund buying the company on its own can count none of that.
A trade sale captures that premium only when two or more strategics bid against each other, because a strategic with no rival bids to the owner's floor instead of to the value it sees.
The strategics most likely to bid are often the company's own competitors, so information goes out in stages, with no names first: an anonymous teaser, then a non-disclosure agreement (NDA), then the data room.
Earn-outs rose in 2025 across the 601 deals in the CMS European M&A Study 2026, and more of them were measured on EBIT or EBITDA.
Strategics often pay part of the price this way. Each earn-out moves that part, and the risk on it, from the buyer to the seller, and one measured on EBITDA, as more were in the CMS study, is paid on books the buyer runs after completion.
How much of an earn-out is ever paid depends on definitions agreed in the letter of intent, before the purchase agreement is drafted.
What changes when the buyer is a private equity firm?
A fund buys a company to sell it again. The price, the structure and what it asks of you all follow from the return it needs at that second sale.
A fund prices on EBITDA, the debt the business can carry and the multiple it expects to sell at. It usually buys a majority and asks the owner and management to roll part of their proceeds into the new structure.
A sale to private equity pays you twice, once at completion and again from the rolled shares when the fund sells. The usual private equity exit strategies are a sale to another fund, to a strategic acquirer or to a continuation vehicle.
What does a rollover cost the owner? Control and liquidity. The rolled share usually sits as a minority in the fund's structure and pays out only when the fund exits, at the value that sale sets.
Funds also run against a clock, and PitchBook data reported by Private Equity Wire shows that around 30% of US private equity-backed assets are now seven years old or more.
A fund buying today plans its resale from the day it signs, which sets how long you stay and what your rollover is worth.
When a fund sells to its own continuation vehicle instead of a new owner, the rolled shares move with the company, and the price is set in the private equity secondary market, where the fund's investors choose to sell or roll.
Is an IPO a realistic exit strategy in 2026?
Public markets are open in 2026, mostly to large companies.
EY's third-quarter IPO barometer counted 367 IPOs worldwide, and US issue volume more than doubled to USD 35.0 billion. Fewer US companies listed, and the average listing was far larger.
An IPO exit strategy is a partial exit. You sell some shares at the listing and the rest later, under a lock-up (a period in which existing holders can't sell), and every later sale is public.
Industry guidance puts the preparation for a listing at 12 to 24 months, as RSM notes.
For a mid-market company aiming at a listing, the realistic first step is pre-IPO funding, a round with investors who buy ahead of it. The round funds the road to a later listing, and the owner's exit comes at or after that listing, under its lock-up. spectup raises those rounds and doesn't run listings.
Dual track: running a sale and a capital raise side by side
A dual track runs a sale to buyers and a capital raise from investors to the same dates, so the shareholders can weigh a bid for the company against an investor's terms for new shares. One of spectup's live sell-side mandates, a European healthcare services company under NDA, runs this way.
It pays when growth capital and a sale are both live options, because buyers bid knowing there's a funded alternative and investors price knowing there's a buyer.
| Step | Leads to |
|---|---|
| Buyers (strategics and funds you approve) | One timetable |
| Investors (for a private placement) | One timetable |
| One timetable (both legs run to the same dates) | Bids to one deadline; Investor offers |
| Bids to one deadline (made knowing a funded option exists) | Shareholders choose the sale or the raise |
| Investor offers (made knowing a buyer exists) | Shareholders choose the sale or the raise |
| Shareholders choose the sale or the raise | end |
It fails when the raise leg is for show. If no investor takes it seriously, it creates no tension and costs management weeks they'd otherwise spend on the business.
RSM describes the listed-market version of the same idea: sponsors and management teams often want "the ability to pivot between a sale process and a public offering depending on market conditions". The private version is a sale against a raise, and it suits more companies, because it needs no listing.
spectup can run both legs because it does capital raising and sell-side M&A, always for the company and its shareholders. The raise leg runs as a private placement mandate on the sale's timetable.
What reaches you after the sale: structure, earn-outs and tax
In most exits, the headline price and the money in your account are different numbers, and your business exit strategy decides how far apart they sit. Net debt and any working-capital adjustment come off first, then the deferred part (a vendor loan), the contingent part (an earn-out) and any rollover.
Take a company that sells at an enterprise value (the price for the business, free of cash and debt) of EUR 40M with EUR 6M of net debt, so the equity is worth EUR 34M. The buyer asks for EUR 7M to be rolled over and makes EUR 5M an earn-out, which leaves EUR 22M paid at completion, before tax.
| Step | Change | Running total |
|---|---|---|
| Enterprise value | 40 | |
| Net debt | −6 | 34 |
| Equity value | 34 | |
| Rolled over into the buyer's structure | −7 | 27 |
| Earn-out, paid only against targets | −5 | 22 |
| Cash at completion | 22 |
If there are other shareholders, the EUR 22M is first split under the articles, with any liquidation preferences paid first, and each holder then pays tax on their own share.
For UK owners, Business Asset Disposal Relief (BADR) taxes qualifying gains at 18% for disposals from 6 April 2026, on up to £1 million of gains over a lifetime; the rest of the gain is taxed at the normal rate.
The same GOV.UK guidance requires the seller to have owned the business for at least 2 years up to the sale, or met the share conditions for that period, so the relief is a planning item long before a buyer is approached.
Elsewhere, an asset sale, a share sale and a rollover are taxed differently in most jurisdictions. Take tax advice before the route is fixed, because the route decides which rules apply.
Where several shareholders and share classes are involved, the liquidation preference calculator shows how a given equity value splits among them.
When should exit planning start?
For most owners, exit planning starts about three years before the intended sale, because a buyer prices how much of last year's profit survives your departure, and moving that takes years.
| Track | What | When |
|---|---|---|
| Route, structure | 0 to 12 months from the start of planning | |
| UK owners: BADR ownership test | 2 years owned up to the sale | 12 to 36 months from the start of planning |
| A team that runs without you | 0 to 30 months from the start of planning | |
| Two years of accounts a buyer can verify | 12 to 36 months from the start of planning | |
| Advisor, buyers, equity story, data room | 24 to 30 months from the start of planning | |
| In market | 30 to 36 months from the start of planning |
About three years out, decide the route and fix the structure: the holding company, the shareholder agreements and, for UK owners, the BADR two-year condition.
From about 24 months, the accounts you close are the ones a buyer will verify, so close them to that standard, and write down how the business runs without you. Vendor due diligence, a report the seller commissions for buyers to rely on, saves time where the numbers are complex.
About 12 months out, appoint the sell-side advisor and start the sell-side process with the buyer universe, the equity story and the data room, so the company can go to market about six months before the intended sale.
What a buyer checks first:
Two years of accounts a buyer can verify
How much revenue is contracted, and which contracts let a customer leave when the company changes hands
Customer concentration
Who holds the customer and supplier relationships
A clean share register
A management team that runs the business without the owner, with its own contracts signed before the sale
Business exit strategy examples: which route prices best
The same five decisions send three owners down three different routes. Each row is illustrative, built on a common owner situation, not a client.
3 columns. Drag the table sideways; the first column stays put.
Owner situation (illustrative example) | Route that usually prices best, and why | What to fix first |
|---|---|---|
B2B software company, EUR 30M revenue; two competitors have asked about it | Trade sale, run as a competitive process: both can price the fit, and each bids against the other | Customer contracts that sit with the owner |
Owner-managed manufacturer with steady EBITDA; the owner wants to step back over three years and has a strong second line | Sale to private equity with a rollover, an MBO bid as the floor: a fund prices the earnings and keeps the team | Audited accounts and the second line's contracts |
Growing testing and inspection business; two buyers and a growth investor have each asked about it | Dual track: the raise leg gives the sale a funded alternative | A growth plan investors can underwrite |
In all three, I'd pick the route by the field first and argue about price second. Owners tend to spend their preparation on the valuation, and it's the number of bidders that sets the price.
How spectup runs a sell-side exit
spectup acts for the seller only; buyers bring their own advisors. A sell-side exit runs in five steps:
Prepare the company as the first stage of the mandate, and agree the route and the floor price with you, including whether a management buyout bid sets that floor.
Build a list of acquirers you approve before anyone is contacted, across strategics and funds.
Approach every acquirer on a no-names basis. An acquirer first sees a one-page profile with no name on it, and learns the name only against a signed non-disclosure agreement.
Run several qualified buyers to one deadline, so the winner has to beat a live rival bid as well as your floor.
Where it fits, run the capital-raise leg alongside as a dual track.
An exit planning advisor and a sell-side advisor do different jobs. The first works on structure and readiness years ahead; the second runs the sale, brings the buyers and is usually appointed about a year before it.
The seller pays a retainer for each month of the mandate, and the success fee falls due at closing, when the sale proceeds land in your account. If the company doesn't sell, there's no success fee to pay.
We take sell-side mandates for companies worth EUR 10M or more in enterprise value.
From the desk. A healthcare business with no process running. We built the acquirer list, took it to a field of strategics on one timetable and ran the sale to signing.
A $10M sale to a strategic acquirer in the United States, closed in 2026; spectup acted for the seller, and was paid by the seller.
Track record: $150M+ M&A advised.
What to settle before the first buyer calls
Some buyers approach owners before any process starts, often when a succession is in the air. spectup makes such calls too. In 2023 we called the owner of a European installer of building systems for an acquirer, prompted by a succession, and kept the acquirer unnamed until the second conversation.
Terms are negotiable for exactly as long as there's more than one bidder, so settle these before you take that call:
Which buyers you'd sell to, and which you wouldn't let into the data room.
How much you sell, and whether you stay after completion.
The date your own plans need, and whether about three years of preparation still fit before it.
Who runs the process for you, on your side only. Size decides it. Under about EUR 10M, a broker lists the business and works from the buyers who come to the listing; above that, an M&A advisor builds the field.
Write the four answers down and bring them to a first call with spectup. The valuation band we give comes off closed deals in your sector and size, and you have it before you sign an engagement letter.
Three conclusions
The route that pays most is the one with the most buyers able to compete for the same company. Set your own terms first, because they decide who can bid at all.
A listing is the narrow route for a company between EUR 10M and EUR 100M. The realistic step toward one is a pre-IPO round with investors who buy ahead of it, and the owner's exit comes at or after the listing.
Owner dependence, customer concentration and accounts a buyer can verify move the price more than any valuation argument, and each takes a year or more to fix.
Business exit strategy: questions readers ask
8 questions on M&A and secondary markets, answered by Edwin Mik, Partner & Head of IR.
01What is an exit strategy in business?
An owner's or investor's plan for turning a stake in a company into cash, by selling it, handing it on or winding the company down.
02What are the different ways to exit a company?
There are eight main routes: a trade sale to a strategic acquirer, a sale to private equity, a management buyout, an IPO, a dual track, a recapitalisation or minority sale, family succession and a wind-down. Which one fits depends on who can pay for the company and whether you want to stay.
03How do you exit your company?
Decide your own terms first: who you'd sell to, how much you sell and whether you stay. Then use the years before the sale to fix what a buyer would discount, from owner dependence to accounts it can verify. About 12 months out, appoint a sell-side advisor to build the buyer list. The sale itself runs on staged disclosure and bids to one deadline, then exclusivity and signing.
04What is the best exit strategy for a business?
Usually the route with the most buyers able to compete for the company. In the mid-market that is often a trade sale or a sale to private equity. Your own terms narrow the field first: whether you stay after completion and how much you sell. Where a capital raise is a real alternative, a dual track sets a bid against an investor's terms.
05What is a 5 year exit strategy?
A plan that starts five years before the intended sale. The two years ahead of the usual three-year preparation go to what takes longest to change: the management team, owner dependence and the shareholder structure. In the UK, Business Asset Disposal Relief also needs at least two years of ownership up to the sale.
06What are the tax implications of different exit strategies?
They depend on the route and the country, because an asset sale, a share sale and a rollover are taxed differently in most jurisdictions. In the UK, GOV.UK puts Business Asset Disposal Relief at 18% on qualifying gains from 6 April 2026, on up to £1 million of lifetime gains, for an owner who has held the business for at least two years.
07What is an exit strategy for investors?
It's how a fund or other shareholder turns its stake into cash: a sale to a strategic, a sale to another fund, an IPO or a continuation vehicle. An owner who rolls over shares is paid when that fund exits.
08When should an owner hire a sell-side advisor or an exit planning advisor?
Hire an exit planning advisor or exit strategy consultant years ahead, for structure, tax and readiness. Hire a sell-side advisor about 12 months before the sale, to build the list of acquirers and run the process to signing. spectup's sell-side M&A advisory starts at an enterprise value of EUR 10M. We act for the seller only, paid through a retainer for each month of the mandate and a success fee due at closing, once the proceeds are yours. A company that doesn't sell owes no success fee.
