Formulating your business exit plan
Ownership of a business frequently represents years, if not decades, of hard work and entrepreneurial savvy. Still, even the most astute business owners are often unfamiliar with the complexities and meticulous preparation that must go into a successful succession strategy.
Whether you're contemplating transferring your business interest to family members, liquidating assets or selling your share to current management or an outside party, you have decisions to make and complex issues to address.
If you're considering selling or transferring your business, you should begin to plan your transaction at least two years before you hope to complete it.
Explore and evaluate multiple exit strategies
Your financial advisor, investment banker, and business broker should also develop alternate strategies for you to consider - beyond simply selling your business to a potential buyer. Many business owners have made their successful exit through a sale to an employee stock ownership plan (ESOP) or a private equity group, and others have unlocked liquidity through a recapitalization of the business.
By exploring multiple options, each of which has its own pros and cons, you can sometimes expand your pool of potential buyers or investors and realize greater value from your transaction. Take into account all stakeholders of the company which includes employees, key customers, and suppliers. If you have been integrally involved in your business and the relationships you have formed with the stakeholders are the foundation of your business, it is important to appropriately present and time the communication of your planned exit.
The transaction of a lifetime
Exiting the business you've built and nurtured over the years is not a simple task - financially or emotionally. Whether you choose to transfer your business to family members or sell it to existing management or a third party, assiduous planning is critical, as is the support of an interdisciplinary team with the expertise to help you articulate and achieve your objectives.