{"id":227320,"date":"2024-08-06T15:14:20","date_gmt":"2024-08-06T02:14:20","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=227320"},"modified":"2026-02-03T14:46:25","modified_gmt":"2026-02-03T01:46:25","slug":"6-tips-for-developing-exit-strategy","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/startups\/6-tips-for-developing-exit-strategy\/","title":{"rendered":"6 Tips for Developing an Exit Strategy for Your NZ Startup"},"content":{"rendered":"\n<p>An exit strategy is an important part of any startup&#8217;s business plan. It outlines how founders and investors can realise the value of their investment, such as by selling the business, merging with another company, or taking other pathways. This article will provide six practical tips for developing an effective exit strategy for your New Zealand startup.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">1. Understand the Importance of an Exit Strategy<\/h2>\n\n\n\n<p>An exit strategy is not just about planning for the end of the business. Instead, it is about setting up your business for a successful transition that benefits all stakeholders.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>An exit plan ensures minimal disruption to business operations and provides clarity to investors on their return on investment.<\/p>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">2. Know the Exit Options<\/h2>\n\n\n\n<p>Your startup has a <a href=\"https:\/\/legalvision.co.nz\/startups\/four-exit-strategies-business-founder\/\">range of exit options<\/a>. As business owners, knowing these options will allow you to adequately prepare, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Business Sale:<\/strong> This means selling the business to another company. The major benefit is that it often means immediate liquidity;<\/li>\n\n\n\n<li><strong>Initial Public Offering (IPO):<\/strong> This refers to listing the company on a stock exchange (being the NZX in New Zealand). It is a complex process but can have significant financial potential;<\/li>\n\n\n\n<li><strong>Merger:<\/strong> This is where the business combines with another company to achieve shared goals and enhance its value; and<\/li>\n\n\n\n<li><strong>Liquidation:<\/strong> This occurs when you close the business and sell all assets. It is considered a last resort.<\/li>\n<\/ul>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left gform_input_bg_white    \">\n    <script>\nvar 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Know How to Time Your Exit<\/h2>\n\n\n\n<p>Timing is everything when it comes to maximising the value of your exit. Some of the major considerations when it comes to timing include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Market Conditions:<\/strong> You should aim to sell during strong market conditions to increase the valuation of the business;<\/li>\n\n\n\n<li><strong>Business Performance:<\/strong> You will ideally sell the business when it is performing well financially and has good growth prospects; and<\/li>\n\n\n\n<li><strong>Emotional Preparedness:<\/strong> As a founder, you must be personally prepared to exit the business or understand the ramifications of being acquired if you opt to stay on with it for a period of time.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">4. Consider the Legal and Regulatory Requirements&nbsp;<\/h2>\n\n\n\n<p>Complying with the legal and regulatory requirements is important for a successful exit.&nbsp;&nbsp;<\/p>\n\n\n\n<p>As a new business owner, you should ensure that you have a good understanding of your company\u2019s governing documents and the provisions that apply to an exit event. This may include the types of shareholder and director approvals necessary to achieve an exit and any preference rights held by certain shareholders.<\/p>\n\n\n\n<p>Any potential buyer will also want to conduct thorough <a href=\"https:\/\/legalvision.co.nz\/startups\/startup-founder-due-diligence\/\">due diligence<\/a> to assess the value of the business. You should prepare for this by:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>ensuring all financial statements up-to-date;&nbsp;<\/li>\n\n\n\n<li>verifying that all legal documents and intellectual property rights are in order; and<\/li>\n\n\n\n<li>providing detailed information about the business\u2019s operations, including collating material contracts of the business for review.<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>In some cases, an exit event can have tax implications for the company and\/or its shareholders. For this reason, tax advice should also be sought.<\/p>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">5. Prepare the Business for Exit<\/h2>\n\n\n\n<p>You should try to prepare the business for an exit by making it as attractive as possible to prospective buyers. Some key steps are outlined in detail below.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Strengthen the financials<\/h3>\n\n\n\n<p>You must ensure that the business demonstrates strong financial performance. This includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>focusing on growing sales and diversifying income streams where possible;&nbsp;<\/li>\n\n\n\n<li>managing expenses to improve profitability; and<\/li>\n\n\n\n<li>ensuring a healthy cash flow to demonstrate financial stability.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">2. Increase efficiency<\/h3>\n\n\n\n<p>Where possible, you should try to streamline your operations to make the business more appealing. This might include:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>implementing standardised processes for smooth operations;<\/li>\n\n\n\n<li>adopting new technologies to improve efficiency and scalability; and<\/li>\n\n\n\n<li>fostering a strong, motivated team that can continue running the business beyond your exit.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">6. Communicate the Exit Strategy<\/h2>\n\n\n\n<p>Clear communication is highly important for ensuring all stakeholders are supportive of the exit strategy you prepare.&nbsp;<\/p>\n\n\n\n<p>You should provide regular updates about the exit strategy and its progress to key internal stakeholders, such as management and more general employees. Where possible, you should work with stakeholders on the planning process to ensure you have their support.&nbsp;<\/p>\n\n\n\n<p>You should communicate effectively with external stakeholders, such as investors and customers, as well as with internal stakeholders. Investors should be informed about the exit strategy and how it will affect their investment.&nbsp;In some cases, it may lead to <a href=\"https:\/\/legalvision.co.nz\/startups\/exit-strategies-investors\/\">investors forming their own exit strategy<\/a>.<\/p>\n\n\n\n<p>On the other hand, customers need to be reassured about the business continuity and what the exit might mean for your startup\u2019s ongoing delivery of goods or services. This is important to ensure ongoing support during and beyond the transition.<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/10\/21140438\/NZ-Startup-Manual-251x360-2.png\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">NZ Startup Manual: A Legal Handbook For Founders<\/div>\n            <div class=\"body-text\">\n                <p>Essential reading for anyone building their startup. This free guide includes practical advice and seven real-life case studies.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/NZ-Startup-Manual.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>A well-thought-out exit strategy provides a roadmap for the future and ensures that all stakeholders are prepared for such a transition. Some key tips for developing an exit strategy for your startup include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>understanding the importance of an exit strategy;<\/li>\n\n\n\n<li>knowing the exit options available to you;<\/li>\n\n\n\n<li>knowing how to time your exit;<\/li>\n\n\n\n<li>considering the legal and regulatory requirements;<\/li>\n\n\n\n<li>preparing the business for exit; and<\/li>\n\n\n\n<li>communicating the exit strategy to all relevant parties.<\/li>\n<\/ul>\n\n\n\n<p>If you need assistance establishing an effective business exit strategy, our experienced <a target=\"_blank\" rel=\"noreferrer noopener\" href=\"https:\/\/legalvision.co.nz\/business-lawyers-lp-new-zealand\"><u>business lawyers<\/u><\/a> can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a target=\"_blank\" rel=\"noreferrer noopener\" href=\"https:\/\/legalvision.co.nz\/membership\/\"><u>membership page<\/u><\/a>.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1722909947248\"><strong class=\"schema-faq-question\">How can you attract potential investors?<\/strong> <p class=\"schema-faq-answer\">You should ensure that all financial statements are up-to-date, verify that all legal documents and intellectual property rights are in order, and provide detailed information about the business\u2019s operations. The latter consideration includes collating the business&#8217;s material contracts for review.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1722909948903\"><strong class=\"schema-faq-question\">How should I notify my investors?<\/strong> <p class=\"schema-faq-answer\">Clear communication is highly important for ensuring all stakeholders are supportive of the exit strategy you prepare.\u00a0As such, you should provide regular updates about the exit strategy and its progress to key internal stakeholders, such as management and more general employees. <\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"5d238358bb\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/227320\" \/>            <input value=\"https:\/\/legalvision.co.nz\/startups\/6-tips-for-developing-exit-strategy\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"6 Tips for Developing an Exit Strategy for Your NZ Startup\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>An exit strategy is an important part of any startup&#8217;s business plan. It outlines how founders and investors can realise the value of their investment, such as by selling the business, merging with another company, or taking other pathways. This article will provide six practical tips for developing an effective exit strategy for your New<a href=\"https:\/\/legalvision.co.nz\/startups\/6-tips-for-developing-exit-strategy\/\">Continue reading <span class=\"sr-only\">&#8220;6 Tips for Developing an Exit Strategy for Your NZ Startup&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13267,"featured_media":225025,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"2303,219791,226036,219845,223829,226172","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[10],"tags":[23,24,33,1404,1759],"class_list":["post-227320","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-startups","tag-start-a-business","tag-startup","tag-company-sale","tag-small-businesses","tag-exit-strategy"],"acf":[],"yoast_head":"<!-- This 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She graduated with a Bachelor of Laws (Hons) from Bond University in 2018.","url":"https:\/\/legalvision.co.nz\/author\/emilyyoung\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/startups\/6-tips-for-developing-exit-strategy\/#faq-question-1722909947248","name":"How can you attract potential investors?","acceptedAnswer":{"@type":"Answer","text":"You should ensure that all financial statements are up-to-date, verify that all legal documents and intellectual property rights are in order, and provide detailed information about the business\u2019s operations. The latter consideration includes collating the business's material contracts for review.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/startups\/6-tips-for-developing-exit-strategy\/#faq-question-1722909948903","name":"How should I notify my investors?","acceptedAnswer":{"@type":"Answer","text":"Clear communication is highly important for ensuring all stakeholders are supportive of the exit strategy you prepare.\u00a0As such, you should provide regular updates about the exit strategy and its progress to key internal stakeholders, such as management and more general employees. 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