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Are you finally ready to take the plunge and kick-start your startup journey in 2025? If you’ve got a brilliant idea, you might be motivated to create a startup so you can eventually cash out – either partially or completely. Whether you’re envisioning a lucrative exit or a gradual transition to a new venture, planning your exit strategy from the start is key.
Having an exit strategy will help you achieve your long-term goals, and meticulous planning is crucial, especially if you’re as ambitious as those groundbreaking tech exits we still talk about today. For example, while Facebook’s acquisition of WhatsApp for $19 billion in 2014 remains an iconic benchmark, more recent exits in 2025 have demonstrated that well-structured strategies can yield similarly impressive returns.
Exit strategies are not exclusive to co-founders. Whether you’re a sole founder, part owner, investor or entrepreneur, having a clear plan for your eventual exit is essential. Being proactive about your exit strategy – and implementing it early – will help ensure an optimal outcome for your business and personal finances.
Not sure where to start? Don’t stress – we’ve got you covered, along with additional insights in our Business Set-Up Guide to help you lay the foundation for success.
What Is An Exit Strategy?
An exit strategy is a plan that enables you to cash out on your business, on your own terms, when the time is right. It lays out how you can transfer ownership – either entirely or partially – to investors, another company, or even the public, in a way that maximises your return.
The primary purpose of an exit strategy is to give you control over the timing and structure of your departure from the business, ensuring that you can secure the best possible financial outcome or limit your losses if the venture does not meet expectations.
An exit strategy doesn’t have to be set in stone. It should be flexible enough to account for market fluctuations, industry trends, and the evolving needs of your business. This flexible approach is especially important in today’s fast-changing economic environment.
There’s a lot involved in planning an exit strategy, so starting early is vital. Have you benchmarked your startup against similar companies in your industry? Have you had a conversation with your co-founders to align on where you see yourselves in five or ten years? Whether you plan for your startup to be a side hustle or your full-time focus, deciding on an exit strategy early will give you confidence and clarity.
A lot of business owners and entrepreneurs begin their ventures with the idea that they will eventually move on. Others are less sure about their long-term commitment. Either way, having a well-crafted exit strategy in place is beneficial.
Having an exit strategy helps you have a say in:
- How you will exit your business
- How much money you will receive when you leave
A good first step is to draft a Founders Term Sheet, which sets out an in-principle, legally non-binding framework for discussions. As your plan matures, you should formalise your intentions with a binding Shareholders Agreement that details the exit provisions and safeguards your interests.
By having an exit strategy in place, you increase the likelihood of receiving a fair return on the time, energy, and capital you’ve invested in your business – ensuring that your hard work pays off when it’s time to move on.
Types Of Exit Strategies
The type of exit strategy you choose will depend on your unique circumstances and long-term goals. In 2025, the landscape for startup exits has evolved, with digital transformation and global market dynamics opening up new opportunities alongside traditional exit routes.
The most common exit strategies include:
- Sell Your Business
Selling your business can yield a significant return, especially if you have built up a strong brand and robust legal foundations. A comprehensive exit plan will help ensure you secure the best price when negotiating with potential buyers.
The first step is to identify potential buyers. This might be a larger company in your industry, a competitor, or even investors such as private equity funds. It’s important to do your homework on the various avenues available – for instance, scaling your business might attract interest from international investors as well as local players.
Whatever route you decide on, be sure your Founders Term Sheet or Shareholders Agreement considers all viable possibilities. For additional guidance on securing your business value, you might also explore our detailed article on protecting your brand with trade marks.
At the end of the day, your exit strategy should be tailored to your specific circumstances and expectations, ensuring that you make an informed decision when the time comes.
- Merge Your Business With Another Company
Mergers can be an effective option when two companies join forces to create a new, combined entity. While in the United States a merger is often seen as a distinct exit route, in Australia it usually results from a business sale or share sale that includes share swaps. Careful legal planning – such as involving a joint venture agreement – is essential to ensure a successful merger.
- Go Public
For larger businesses, going public via an Initial Public Offering (IPO) is another viable form of exit. By offering shares to the public on a stock exchange such as the ASX, you not only attract new capital but also increase your company’s visibility and growth prospects. Although an IPO can be an expensive and lengthy process, if executed well it can deliver significant long-term benefits.
No matter which exit strategy you choose, planning ahead is crucial. In 2025, being well-prepared – from having robust legal documents to protecting your intellectual property – will significantly enhance your chances of securing a profitable exit.
What Are The Benefits Of Having An Exit Strategy?
Having an effective and customised exit strategy in place increases the likelihood of achieving a favourable outcome. It empowers you to:
- Choose when and on what terms you exit your business
- Generate a substantial income for retirement or new ventures after you leave
- Create a smooth transition for successors or new management
- Protect the value of the business you have built
- Enhance the future worth of your enterprise
These benefits are, of course, shaped by the exit strategy you choose. A well-executed exit strategy not only secures your financial interests but also strengthens your business’s legacy.
So, How Do I Form An Exit Strategy?
An exit strategy isn’t typically contained in a single legal document; rather, it’s an evolving plan that provides you with the flexibility to adapt to market changes and business demands. In 2025, with rapidly shifting market dynamics and digital innovation, planning ahead has never been more important.
A Founders Term Sheet or Shareholders Agreement is a good starting point to align expectations among founders and set the groundwork for your exit. Coupled with ongoing preparation – such as refining your business model, protecting key intellectual property (learn more about that in our trade mark registration guide) and formally documenting your structure – you can build a robust legal foundation that reassures potential acquirers or public investors.
In today’s market, an experienced lawyer can be an invaluable asset. By working with a legal professional who understands the intricacies of startups – like our team here at Sprintlaw – you can ensure that all of your legal bases are covered, from initial business registration to drafting critical contractual documents. This proactive approach not only prepares you for a successful exit but also positions your business favourably for future growth.
Additionally, reviewing your strategic documents regularly and considering market feedback can help you adjust your exit strategy over time. This ongoing process ensures that when scrutiny comes from potential buyers or public markets, every aspect of your business is in its best possible shape.
Need More Help?
We’ve got you covered! Our team can help you set up your startup properly and fine-tune your exit strategy so that when the time comes, you’re perfectly positioned for a smooth and profitable transition. Reach out to us via email at team@sprintlaw.com.au or by phone on 1800 730 617 for a free, no-obligations chat.
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