Towards the exit: Know and assess the options business transition

A well crafted exit plan is a business essential, and something that owners should be thinking about the day when they open their doors. But too often, owners are not aware of exit strategies, the most gratifying and rewarding than what I have chosen, resulting in unsatisfactory sales.

The choice of the exit strategy able to meet the needs of personal and business can be a complex matter. There are several common options to exit a business, and the decision for the right should be based on the considered judgment of what to optimize the benefits and achieve personal goals and business owner's exit.

Transfer to a family member or members

Sell ​​the company to a family member may seem an attractive option in response to a series of personal and financial objectives: the passage of property to heirs, maintaining an involvement in the field, continuing to earn income from it.

It does bring some inbuilt uncertainty - there is no guarantee that a family member will definitely interested in taking the business of some way to the future or who have the skills and abilities to do so. If the company was started with the clear goal of eventually transmitted to the family, the owner is committed to timely and detailed planning around keeping the family planned interested in taking over the business (years later) and have them trained to be competent enough to do so when the time comes.

Selling to family members often results in family dissension. Careful planning is necessary to involve family admission (usually by a family council is formally constituted) and a formal succession plan for who gets what.

Sale to financial buyer

Here, the critical issue is the value of the business, so long-term activity has been devoted to govern for sale before putting on the market. This may be a preferred strategy for a family business where there is not a member of the family interested or able to take over. The family might benefit more than having the funds to invest in a place other than the inefficient management of the business.

To optimize the conditions of sale of the new owner can insist the seller continues to manage the company for an agreed period of time. The transition from the employer to the employee may not be congenial to all.

The sale is usually made to the highest bidder, thus posing with a broker means a wider range of potential buyers will be identified.

If the business consists of a number of areas clear and useful, separate operational, it may be advantageous to break those and sell them separately.

Sale to a strategic buyer (mergers and acquisitions)

In most mergers of the company's shareholders receive shares in the company's largest. Therefore, in casting the seller may not actually receive their money for some time after the sale and must be provided for the transition period. And the seller may be required to sign an agreement not to compete by limiting their freedom to operate in the same area for a future period.

Exiting by acquisition is to find a larger company that will benefit the seller to acquire. They may be looking to expand their line to the region or product, or acquire the intellectual property that would have taken much time and money to develop themselves. Being the gateway with it a premium price from the buyer.

Planning to go this route involves the construction of competitive advantages and strong markets that might be useful to another company.

Buyout by operators / employees

This option may not be as profitable as selling to a financial buyer, but has some other advantages. Entrepreneurs do not have to sell it all at once, by agreement, the payment could be made over time.

Because employees know the business is less due diligence because they own it and have a commitment to making work - actions that the employer retains could earn a higher dividend or have a higher value when they are finally on sale.

There are also some significant tax advantages employees of acquisitions, particularly in the case of stock owned by employees (ESOP).

Asset liquidation

For companies burdened by debt or messy commitments (such as long term leases) and if its legal structure therefore provides an easy way to get instant cash without any long planning and negotiation is to quit the company and sell the goods.

Settlement may be the option of choice because of the type of activities (many micro and home out of this way when they could actually be sold), because of the way it is managed, (the owner has become so overly dependent on Their specific skills that the sale is realistic), or due to unforeseen circumstances (a disaster without a disaster recovery plan).

This strategy, while the clean-cut and relatively simple, usually returns the smallest amount of money because they are only the first activities at whatever price buyers are willing to pay for them. However, it is the less tangible assets such as customer lists, reputation, business relationships and even key employees who can provide the hook to catch a buyer for the company as a going concern. Unless the owner appreciates the real values ​​of these assets and take the effort to seek stakeholders likely their value will be lost.

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Develop an effective strategy output is an integral part of the process of succession planning. Just like building a successful business requires planning, hard work, and a little 'luck, so do not let success.