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Redevelopment is the process that helps to expand a current business. The current project is based upon a case scenario of Golden Shoe Park whose CEO wants to the redevelopment of Carpark into the new CapitaSpring office building. For this, the report helps to present some exit strategies and then present one best suited method for a company with proper recommendations.
The Golden Shoe Carpark wants to redevelop its existing business into a new business name as 'CapitaSpring'. As the company currently faces some financial problems and due to this it wants to convert its existing business into the new one in 2021. So that it may help a company to raise its financial status in market (Macaulay, 2018). In order to redevelop its business, the company wants to take exit from it. Therefore, there are so many exit options available some of them are as mentioned below:
Liquidation: it is one of the most common exit strategies which every small business opt. Under this method owner sell all assets to someone and this is adopted by those business who is a single owner of a company. The biggest advantages of using this is that it is so simple to use and the business is also wind up easily and quickly. But on the other side, it has the lowest return on investment (ROI), which means that the only money from a liquidation sale is from a disposal of asset (Hassan, Ghauri and Mayrhofer, 2018).
Keep a business in a family only: it is also a simple method to implement because the business will run by a family members only. The advantage of using this, can make a smooth transition by grooming a family successor. As a result, if a person needs any advice then the old owner can suggest ways in order to take from some problems. While on the other side, developing a family succession plan can be difficult and lead to creates some differences between family members (Kienzler, Kindström and Brashear-Alejandro, 2018).
Merger and Acquisitions: It is a method, under which a company either buy by a mergers with some goals so that it means to the flexibility in a terms of involvement. That is why it is considered the best method for small businesses. But the process takes a long time but still many business owner will adopt this method. Even acquisition or to acquire business can also be considered another method to take an exit from the existing business (Brueller, Carmeli and Markman, 2018). Merger and acquisition are simply merging with a similar company and this is quite helpful for many companies.
Initial Public Offering (IPO): It is a quick way and preferred mode but as the internet bubble burst the IPO rates decline every year and therefore, it is not used by any company. As the shareholders are demanding and their liabilities concerns are so high that is why they did not prefer to use these options (Exit strategies, 2018).
Suitable strategy for CapitaSpring: As per case scenario, for a quoted company, liquidation and merger is the best suitable option for a company. As the company recently acquire Asia Square tower which increases their debt ration and may further financial risk for a company. That is why Golden Shoe Carpark must have the to sell all its current assets and then merge it with another similar company in order to expand its business.
Justification: Liquidation is so simple method to execute and the current business can be easily wind up which helps to shut it down. Golden Shoe Carpark can also merge with another company will be helpful for a company in its future growth. Merging with another company will be helpful because it can penetrate to some new market and the chances of its betterment are increases. Moreover a products will be developed and as a result, the company can easily maximizes their profitability (Ahmed, Manwani and Ahmed, 2018). Choosing this option will help a company to expand its business in new market and if two companies merges it will definitely get benefit at economies of scale.
Additionally, as a company merges its overall revenue will automatically increase and as a result, its financial status will automatically be upgraded. As the company initially faces some financial crisis that is why the company has to take an exit in a form of liquidation or merger with some other company.
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By summing up the above report it has been concluded that Golden Shoe Carpark wants to redevelop its business by the name CapitaSpring. As the report presents an overview of a company and concluded that mergers and liquidation are considered the simplest method for a firm. That is why the company can opt for this option as an exit strategy because it helps to enhance its financial status.
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