What is my best exit option?

The answer to this question is different for every business owner depending on goals, facts and circumstances. When deciding the right way to exit business ownership, owners should understand and weigh all of their options. This article summarizes eight common exit options and their pros and cons. Some are more common than others. All options should be put on the table when selecting your exit path.

Eight Common Exit Options

  • Option 1.  Transfer to Family
  • Option 2.  Sell to Other Shareholders
  • Option 3.  Sell to Management
  • Option 4.  Sell to Employees using an ESOP
  • Option 5.  Sell to a Third Party
  • Option 6.  Recapitalize
  • Option 7.  Go Public
  • Option 8.  Liquidate

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Another option is to not exit ownership and scale back your hours, and either hire and retain capable managers to run the company for you, or milk the company to support your lifestyle while it naturally declines in profitability and value. For some businesses and some owners, this is a perfectly good exit strategy. In the end, you decide what’s best.

However, from my perspective having worked closely with business owners for a long time, the failure of many California business owners to adequately plan their exit often yields tragic results. Misinformation, procrastination and poor planning lead to missed legacy, wealth and retirement goals. Whereas, thoughtful preparation and implementation of an exit plan increases shareholder value and allows owners to exit on their own terms and time frame. The process can be fairly complicated and requires specialized expertise that few owners have.  If you want to exit your business in the next five years, now is the time to plan.

If you’d like help assessing your business and circumstances and creating an exit roadmap, or want help carrying out a sale or other exit option, connect with Exit Strategies’ president Al Statz at 707-781-8580 or email alstatz@exitstrategiesgroup.com.