Businesses are entities that are likely to undergo changes in the course of operation.

It
is important to note that businesses go through phases and each phase has got its
special requirements.

For instance when business is starting there is need to ensure that the legal documents
are put in place, there is sufficient capital and there are available parties to run the
business. Evaluations should be carried out against the stage of business development
as well as the prevailing circumstances at that point.

As an entrepreneur, one of the main goals of establishing and running a business are to
make profit and make the business a success. This implies that in cases where this
reason and any other reason are not met then there is need to bring the business to an
end.

Among many other reasons entrepreneurs bring the business to a close in light of the
following reasons,

 Burnout from the business

 Low operating and growth capital
 Lack of inheritance for business
 Liquidating the business
 Old age or serious health issue
 Focusing on other interests

In such cases, a strategy is developed by the entrepreneur to enable him or her to gain
maximum benefits while ending the particular enterprise.

The strategy which is utilized when one is changing or shifting from one enterprise to
another is known as an exit strategy. The exit strategy can be defined as a component
of a business plan where an entrepreneur describes a method which investors realize
tangible return on their investment. Inventors usually want to transform their share into
the investment to a liquid form which is why it is referred to as liquidity. This is the point
where the business realizes the cash return for the owners or investors. The activity is
usually approached through an initial public offering or a sale of venture.
In essence, many entrepreneurs seek to gain or acquire capital through the public
markets. This is done through the initial public offering.

It is important to note that through a capital increase associated with an IPO against
cash contributions or through the issuance of shares to private and institutional
investors, the company’s capital adequacy is improved all over sudden.

A case in point is the acquisition of PayPal by eBay. PayPal is a company which is

based in America which specializes in e-commerce. It allows payments and money
transfers to be made through the internet. This offers the customers alternative ways of
transacting money from the traditional methods such as the checks and other paper
methods.

PayPal had been a service provider of choice until October 3, 2002 when eBay acquired
stakes in it. This acquisition cost eBay $1.5 billion. EBay is a San Jose based company
which offers its services across the world.

This took place when PayPal went public through the initial public offer. Through this
acquisition, eBay was able to control the electronic payment service. Analysts state that
due to the stiff competition which PayPal had with eBay, it was easier for eBay to
buyout PayPal than to beat it.

Within the actions through which people can exit their business, the most importance is
usually received from press as well as research is IPO. An IPO is basically the sale of
the portion of the company to the public by making a stock offering. This is a relatively
safer choice for many people.
Successful initial public offerings enable businesses to gain higher valuation for the
stockholders who are in existence thus leading to generation of cash from interested
investors.

The drawback of the initial public offering is normally contributed by the nature of the
process. An IPO is an expensive and lengthy process. This implies that it is a process
which needs a lot of time, energy, and capital to complete the legal steps which are a
requirement by the legislation.

Furthermore, the IPO requires the company to exhibit much greater transparency to the
public and to regulators.
Even though the companies that prepare for IPOs usually come under the attention of
investors, it does not necessarily mean an investment since IPO companies do not have
a public record for viewing of their stock price.

During the PayPal initial public offering there were certain aspects which had an impact
on PayPal’s later performances. Essentially, PayPal did not set a price tag this implied
that there were no specific limits about the amount which was expected to be raised.

Furthermore, it offered an IPO when the markets were struggling. Initially, the PayPal
stocks soared unexpectedly in the market during its debut, but that did not last long.
This drop was attributed to market conditions which were prevailing at that particular
time.

In addition, the announcement from eBay about the stake acquisition of 35%also had a
major blow of the way the stock shares behaved in the following days. This was a major
blow because the majority of eBay users had been using the PayPal service.

Thus this led the investors to interpret the acquisition as an indication that eBay would
be more aggressive in the promotion of services which were similar to PayPal. During
this time, PayPal suffered another blow when a customer filed a law suit against it
because of claims regarding freezing of their accounts without sufficient reason.

The company could not make any statements due to the restrictions regarding the
company weeks before and after the stock offering. This tainted a big blow to the image
of the company.

There are several ways that this situation could be averted. First, it was important to
establish the timing and ensure that the market trends do not harm the prospects of the
organization. As a company which is listing is going public, the management should be
careful not to bring out contradictory information or inflammatory remarks which can
taint the image of the company.

Thus, it is fundamental to note the establishing the rules of going public is not just a
public relations affair, it entails bringing on board a diverse team of experts who should
advice on the best move possible as well as inform the management team on any
looming pitfalls during and after this period.
Lastly, entrepreneurs are generally risk takers. This is because they attempt things that
have never been attempted before and they go ahead and execute with precision.
However, it is not always the case that the outcome will be positive. This
notwithstanding, information and insight into any venture is crucial for business.