The 8 Exit Strategies for Business Owners

by | Jul 6, 2020 | Wealth Management

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Do you have an business exit plan strategy?

1. Transfer the company to a family member(s) – This seems like the easiest choice for many owners but there are several considerations like potential family issues, children(s) ability to run the company and this exit strategy may not provide sufficient cash payouts in retirement.

2. Transfer to a key employee(s) – This exit strategy provides incentives for key employees and provides business continuity. However, can the employees afford a buyout and do they have the ability to run the company?

3. Transfer via ESOP – This exit strategy can be a great alternative since it can provide cash to you upfront. The downside is complexity, costs, and this is not the right solution for some.

4. Sale to co-owners – This is one of the most elegant exit strategies and can easily be done.

5. Sale to a third party – This may provide you the most money butincreases the chances your company loses the identity and culture you worked so hard to create.

6. IPO – This is a great strategy for some, but the company should be worth at least $300 million to consider this strategy. This strategy can increase cash in your pocket but keep in mind it doesn’t completely exit you from the business.

7. Passive Ownership – This strategy can be used on its own or in conjunction with another strategy like selling to family or key employees. This allows you to retain control longer but reduces immediate cash payouts.

8. Liquidation – For some, this is the only alternative if the company’s success is based on one individual or if you need to leave the company immediately.

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