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Business exit reasons and strategies

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

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Ian
Coach
am 8. Mai 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

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)
am 9. Mai 2021
#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success: ➡ interviewoffers.com | Ex BCG | 10Y+ Coaching

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

am 9. Mai 2021
McKinsey | NASA | top 10 FT MBA professor for consulting interviews | 6+ years of coaching

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

Best,
Antonello

Clara
Coach
am 11. Mai 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Well done! I would add: 

  • Market becoming unnatractive
  • Lack of alignment with company focus

Hope it helps!

Cheers, 

Clara

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