Selling, Passing on or Closing? Determinants of Entrepreneurial Intentions on Exit Modes

Exit is an important part of the entrepreneurial lifecycle. In contrast to numerous previous studies on entry, however, little attention has been paid to entrepreneurial exit, and much less on exit modes thus far. Using a recent original survey data on small business owners in New Zealand, where a large majority of them prefer selling their firms when they exit, we empirically investigate the determinants of intended entrepreneurial exit modes: selling out, succession, or closure. Estimation results of multinomial logit analysis suggest that the intention to sell the business is significantly affected by the size and performance of the firm, the involvement of family and how the owner entered the business. Moreover, we find that the intention to liquidate the business is significantly affected by the size and performance of the firm and partly by family involvement in the business.