What happens to a brand in an exit strategy? Here are 5 types, and how to handle challenges

by | Feb 19, 2024 | Public Relations

Building a brand from the ground up is a rewarding yet challenging experience. It takes time, patience, and innovation to take an idea and turn it into a profitable business. 

Despite all the work that goes into this process, many founders decide to exit from their business for one reason or another. When this happens, there’s often a window of rapid change that’s overwhelming and stressful for both employees and customers. 

While it’s true that things will eventually settle down, taking the right steps early can reduce the impact and lead to a better experience for everyone involved with the company. 

From a PR perspective, it’s important to understand each type of exit strategy and how it will affect the employees, investors, and customers. With this knowledge, you can prepare effective press releases and presentations that reduce confusion and keep people focused on the future. 

Five common types of brand exit strategies

First, we will look at five of the most common types of exit strategies so you can see how each works and who is affected.

Our goal is to explain each type and discuss when it’s useful. Finally, we will wrap it all up by exploring how PR teams can handle these situations. 

  • Initial public offering (IPO)

The first exit strategy on our list today is an initial public offering (IPO). 

An IPO is when a company lists shares on a public stock exchange. This is a common exit strategy for in-house investors (like founders and employees) who want to maximize their return on investment before they step away and pursue other interests.

IPOs are also effective for improving awareness and scaling a business since the company will officially be tradeable on the stock market. 

This strategy poses a challenge for PR teams because it’s likely one of the first times they will see intense media scrutiny. The extra pressure means your team will need to be pressed to respond quickly to keep speculation and rumors in check. 

You should also know that there are specific guidelines and regulations established by the 

U.S. Securities and Exchange Commission (SEC), as well as the stock exchange. Be sure to read and follow the rules to protect yourself and investors. 

  • Strategic acquisition

A strategic acquisition is when a company buys another business in order to gain a competitive advantage.

The way it works is fairly simple. 

Teams within a company will analyze their competition so they can see how many potential sales they are losing to people selling similar products. Once they have a list, they look through it and figure out if they could buy any of them in order to drive more traffic to their site. 

Here’s a practical example: Let’s say “Company A” has 40 percent of the market, and “Company B” has 15 percent. If A buys out B through a strategic acquisition, they can redirect traffic to their site and potentially control 55 percent (a majority) of the market. 

Since brands that are purchased usually shut down or merge, it’s important to be transparent and let customers know what’s happening. You don’t want to be in a situation where people are trying to get to your site only to realize that it’s gone. 

  • Merger

A merger is very similar to a strategic acquisition, except the two brands actually become one via a buyout. This process usually involves taking the smaller team and training them to join the larger team. 

In this situation, the owner can choose to leave or stick around as a product manager under the umbrella of the business that purchased their brand. Most leaders exit after the transition so they can be sure that their customers are aware of the situation and know how things will change moving forward. 

The PR team will usually write blog posts and press releases that are designed to get customers from both brands excited about the merger. It can take some time to get people comfortable with this type of change, but with a strategic PR approach and a well-made onboarding program, this can be a graceful exit strategy for some founders. 

  • Employee & management buyout

In an employee and management buyout (EMBO), the company’s employees and managers come together to purchase the business from the owner. This allows the team to take control of the company’s future. Normally, the brand stays intact since the people who built it are now running the show.

As the new owners, the employees, and managers will likely aim to maintain stability and continuity for the brand. After all, they have a vested interest in the company’s success and want to see it thrive under their leadership. 

However, expect them to make some changes over time so they can put their personality and vision into the brand.

For the PR team, an EMBO means largely business as usual. You’ll continue promoting the brand and managing media relations as you always have. However, you may need to issue a press release announcing the change in ownership and reiterate the company’s vision and values under the new leadership.

  • Liquidation

Liquidation is an exit strategy that involves shutting down the business completely. This means selling off all remaining assets and inventory to repay debts before closing up shop for good.

Interestingly, for businesses with a focus on custom merchandise, such as print-on-demand t-shirt companies, liquidation might involve a final sale of unique inventory or even transferring the print-on-demand capabilities to another entity. This can ensure that the brand’s legacy lives on through its designs and products, even after the business itself has ceased operations.

On the PR side of things, you’ll want to craft messaging explaining the reason for liquidation to your audience. Be transparent about the situation while reassuring them you’ll do your best to handle the process responsibly.

It’s also important to let customers and stakeholders know how the liquidation will impact them. For instance, your PRs should explain when the brand will stop operations or when products and services will no longer be available. 

Providing timelines for the phases of liquidation and customer service up until the very end will help you maintain the brand’s reputation despite this less-than-optimal situation.  

How PR teams can overcome these situations

Now that we’ve discussed the most common brand exit strategies let’s circle back and close this article by reviewing a few actionable tips that will help PR experts overcome the challenging scenarios we covered today:

  • Stay nimble. When a company goes through an exit strategy, things move very fast. You need to be prepared to cover these rapid-fire changes in a way that’s concise and informative.
  • Talk to leadership often. Since things can change so quickly, you should stay in touch with leadership every step of the way. We suggest reaching out several times a week during major transitional periods so everyone’s on the same page.
  • Reach out to the media. Make sure you write press releases and send them out to the media so they can share the news with their audience. This will ensure that your messages reach everyone affected by the change. 
  • Practice social listening. Social listening tools can help you see what people are saying about the brand during this time. Don’t be afraid to chime in so people see that your team is listening and wants to make sure everyone understands what’s going on. 
  • Create FAQ pages. FAQ pages are a great way to quickly and easily answer common questions and concerns posed by the media, investors, and current customers. Display them on your website and include links on social media so everyone can stay in the loop. 
  • Stay positive. One of the best things you can do as a PR expert is stay positive, even if you’re facing a lot of challenges. Your positive attitude will rub off through your writing and media interviews, which will make everyone feel more comfortable.

Syed Balkhi
Syed Balkhi is the founder of WPBeginner, the largest free WordPress resource site. With over 10 years of experience, he’s the leading WordPress expert in the industry. You can learn more about Syed and his portfolio of companies by following him on his social media networks.