If they are willing to continue illegal activity, we'd be much the better if they did go out of business.
"(b) move overseas"
They are just short of doing that anyway. If they could, they'd jump the border faster than an Illegalien on a moonless night because there is no incentive from the FedGov for them to stay, no penalties when they do, and Illegaliens are part of the problem. Simply put, if laborers are paid more, they'll be abled to pay more.
"or (c) if it is the kind of business that cannot be replaced by overseas competitors (restaurants), raise their prices enormously and thus shrink their business."
Illegaliens and those that hire them contribute to a false standard of living by keeping wages and prices of goods and services artificially low. Many of them and others affected by their impact on the economy have to resort to some taxpayer funded support program at some point because their low wages prevent them from acquiring those goods and services on their own. The net effect is lower paid laborers pay less in taxes which increase the tax burden on the middle class and businesses. That in turn, causes many more into assistance programs, further increasing "entitlement" spending when there's no room in Governments' budgets to do so.
In short, there is nothing but economic disaster by having low-wage, underpaid labor illegally within our borders.