Has the time come for you to leave your business?
Perhaps you’ve been running the business for decades and you want to call it a day and enjoy life in retirement. Or the business’s valuation has hit record highs and you want to cash out while the market is still hot. Or maybe you want to try your luck in another industry.
Regardless of your specific reasons, there are various business exit strategies you can use. In this article, we’ll explore some of the most common strategies for exiting a business, helping you make an informed choice in the process.
Let’s dive in:
Sell Your Business/ Stake
Selling a business is the most straightforward way to exit a business, especially if you’re the sole owner. Just like any other asset, you can put the business up for sale and someone will buy it.
There are a lot of things you need to take care of before selling your business. For instance, ensure all the paperwork is in order since prospective buyers will need it when doing due diligence. You also need to get the timing right, especially if you want to make the most money from the sale.
If you own a stake in the business, the selling process will largely depend on whether the company is publicly or privately held. If it’s a public company, a stockbroker can quickly help you offload your entire shareholding. If it’s privately held, you could sell to one of the partners or find a buyer in the private market.
Family Succession
Selling your business puts it under new ownership. The buyer will have exclusive control over every aspect of the company. They can even change the name if they’d like.
If you’re emotionally attached to the business and would love it to be under the hands of someone who will preserve your values, consider a family succession. If you have adult children, for example, they can succeed you at the helm of the business.
Done right, family succession is an effective way to exit a business while keeping it in the family. Done wrong, such as can be the case when incompetent heirs take over, it can ruin the business.
Donate Your Interests to Charity
You’ve probably heard of wealthy people who’re donating a percentage of their stake in a company to charity. You can also use the same approach, but it works best when you’re a shareholder in a business rather than an owner-manager.
When you donate shares to a charity of your choice, the charity will assume ownership and enjoy the same benefits you were enjoying, such as dividend payments or a board seat. The beneficiary also gets the power to liquidate the donated shares whenever they choose.
A Smooth Business Exit
As the popular saying goes, everything with a beginning has an end. If the time has to come to say goodbye to your business has come, you’ve got a number of options. The right business exit strategy will depend on your financial objectives, the nature of your ownership, and your own personal preferences.
Stay tuned to our blog for more tips on business ownership.
