Question

Wendy has recently been approached by a Rita to sell her art gallery. Rita has been in the art business for over twenty years, but has never owned her own gallery. She tells Wendy that this has been one of her dreams since she was young.

If Wendy sells the gallery to Rita, which exit option will she adopt?
A) Initial Public Offering (IPO)
B) Merger or Acquisition
C) Liquidation
D) Succession or Management Buyout

Answer 1

Wendy's sale of her art gallery to Rita constitutes a Succession or Management Buyout, as it involves a planned transfer of the business to another individual within the same industry.

Step-by-step explanation:

If Wendy sells her art gallery to Rita, the exit option she would be adopting is Succession or Management Buyout. This is because the business is being transferred to another individual who has been in the same industry and wishes to own the gallery themselves. It's not a case of going public with an Initial Public Offering (IPO), being acquired by or merged with another company (Merger or Acquisition), or ceasing operations and liquidating assets (Liquidation). Instead, this is a planned handover, essentially a sale to an individual who will likely manage the gallery themselves, thus, a Management Buyout or Succession.