8. 8 Exit Strategy

8 Exit Strategy

Eco Oils will have a number of options that will help it to optimize returns for its shareholders. The options have been described below:

Sale – This is the most common exit strategy, where Eco Oils could be acquired by a major player. Cash generated from the sale can be used to repay any shareholder debt held by the company. In this case, the value will be intrinsic to the historic performance of the company. The company will need to achieve a certain critical mass in order to release true shareholder value.

Merger – Eco Oils could merge with another larger organization and the shareholders can receive stock in return. The assets and liabilities would be transferred to the larger organization.

Go Public – Eco Oils may apply to various exchanges in the USA or Canada to obtain legal status as a publicly traded company. In this case, the company will need to achieve a certain critical mass in order to achieve true shareholder value.

Leveraged Buyout – This can happen if another company from the same line of business buys out Eco Oils. In an arrangement of this nature, the final price can be tied to the performance of the business and for a pre-defined period after change of ownership. However, it does provide cash returns and any debt can potentially be repaid from the cash generated or get transferred to the buyer.

Refinancing – The Company can get its assets refinanced in order to pay off investors.