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Business exit reasons and strategies

Case Interview

Hello everyone, what can be the reasons for a company to exit a market (business segment, country ..) ?

I was thinking about:

- Financial failure (profits declining, low margins, debts ..)

- Operational failure (suppliers problems, customer insatisfaction, poor management..)

- Market uncertainty/conditions (politics, financial crisis, legal issues, new disrupting competitor, mature market ..)

Concerning the exit strategy, I was thinking of:

- M&A

- Going public (IPO)

- Close-down the business

Do you have other ideas?

Thank you so much

Hello everyone, what can be the reasons for a company to exit a market (business segment, country ..) ?

I was thinking about:

- Financial failure (profits declining, low margins, debts ..)

- Operational failure (suppliers problems, customer insatisfaction, poor management..)

- Market uncertainty/conditions (politics, financial crisis, legal issues, new disrupting competitor, mature market ..)

Concerning the exit strategy, I was thinking of:

- M&A

- Going public (IPO)

- Close-down the business

Do you have other ideas?

Thank you so much

 Neue Antwort am 11. Mai 2021
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Hi there,

Your list is pretty good, but I have the following comments:

  1. We could also leave the market because...the market is fandamentally unattractive (shrinking market size, decreasing margins, price wars, substitutes coming in, etc.)
  2. In terms of exit strategy, IPO literally makes no sense!
  3. In addition to being bought out (M&A) nd completely closing the business, you can also pivot into a new market (Look at GM with EV/AV tech)

Hi there,

Your list is pretty good, but I have the following comments:

  1. We could also leave the market because...the market is fandamentally unattractive (shrinking market size, decreasing margins, price wars, substitutes coming in, etc.)
  2. In terms of exit strategy, IPO literally makes no sense!
  3. In addition to being bought out (M&A) nd completely closing the business, you can also pivot into a new market (Look at GM with EV/AV tech)
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Hi there,

You should leave a market if:

  1. It doesn’t allow you to reach the goal of the company or
  2. It allows to reach the goal but more slowly than another option (ie too large opportunity cost). This was the GE mentality - you should be in a market just if you can be #1 or #2 there

As options to leave a market:

  1. Sell to someone else
  2. Shut down the business

Can’t see IPO as an option to exit ;)

Best,

Francesco

Hi there,

You should leave a market if:

  1. It doesn’t allow you to reach the goal of the company or
  2. It allows to reach the goal but more slowly than another option (ie too large opportunity cost). This was the GE mentality - you should be in a market just if you can be #1 or #2 there

As options to leave a market:

  1. Sell to someone else
  2. Shut down the business

Can’t see IPO as an option to exit ;)

Best,

Francesco

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Hi, I confirm IPO should not be considered as an option

Best,
Antonello

Hi, I confirm IPO should not be considered as an option

Best,
Antonello

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Hello!

Well done! I would add:

  • Market becoming unnatractive
  • Lack of alignment with company focus

Hope it helps!

Cheers,

Clara

Hello!

Well done! I would add:

  • Market becoming unnatractive
  • Lack of alignment with company focus

Hope it helps!

Cheers,

Clara

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