Business owners are often too busy to realize the value of developing an exit plan in advance. For optimum results, it is always best to plan ahead. Whether an owner chooses to pass the operation onto their successors, go public with stock or just liquidate the operation, planning ahead will always generate the most lucrative results.
Your choice of how to exit mostly depends on your specific goals, and the interests of your heirs. There are a number of viable exit plans for you to consider.
A frequently used option is to liquidate the business. With this plan, you could propose a simple and attractive agreement for successors who have the skills, proficiency or know how that are a major asset to the business. Nevertheless, liquidation often compromises your ongoing financial assets, and some assets may only sell for little of their net worth.
Another exit plan could be to pass the operation onto your family members. But you need to be aware that business continuation is a detailed method of action, and it should be managed in a delicate manner. For one, you will need to consider the interests and business knowledge of your successors, and develop a comprehensive training plan. Also, you have to take into account the interests of your heirs and key workers who are not connected to the operation. Then you could either pass ownership to your successors as a gift (entails an estate plan), or they could finance the the purchase by borrowing the full selling amount, or maybe pay it off in installments.
If you choose to sell the business to your employees or associates, you need to plan in advance in order to accomplish the optimum results. In such a case, a buy/sell agreement is necessary regardless of why you are selling. This contract needs to show who will purchase and have control of the operation, how it will be funded, and who will obtain the proceeds of the deal. Also, this contract needs to specify how the business assets and control will be allocated among your living associates and beneficiaries.
If there are no interested buyers amongst your family or employees, you could choose to sell to an outside party. Interested buyers could be current business owners, competitors, or a buyer who wants to purchase an existing establishment. If this strategy is suitable, it will require the assistance of an experienced business broker, tax advisor, and an attorney to help manage the sale and assist you in finding an interested buyer.
Going public with company stock may be another feasible option for selling your operation. This strategy could allow you to realize liquidity, and still let you keep some control. But you must understand that when you publicly sell stock, you are legally responsible to place the interests of the shareholders at the forefront. Like all exit plans, selling public stock takes comprehensive planning. You will be under the close scrutiny of financial professionals and investors, so it is essential to build a strong track record.
Obviously, your family business is a an essential component of your financial success, so it is imperative that your exit plan fits inwith your overall financial plan. It is important for you to plan in advance, and consult with a professional financial team to help you accomplish your personal and business objectives.
Your choice of how to exit mostly depends on your specific goals, and the interests of your heirs. There are a number of viable exit plans for you to consider.
A frequently used option is to liquidate the business. With this plan, you could propose a simple and attractive agreement for successors who have the skills, proficiency or know how that are a major asset to the business. Nevertheless, liquidation often compromises your ongoing financial assets, and some assets may only sell for little of their net worth.
Another exit plan could be to pass the operation onto your family members. But you need to be aware that business continuation is a detailed method of action, and it should be managed in a delicate manner. For one, you will need to consider the interests and business knowledge of your successors, and develop a comprehensive training plan. Also, you have to take into account the interests of your heirs and key workers who are not connected to the operation. Then you could either pass ownership to your successors as a gift (entails an estate plan), or they could finance the the purchase by borrowing the full selling amount, or maybe pay it off in installments.
If you choose to sell the business to your employees or associates, you need to plan in advance in order to accomplish the optimum results. In such a case, a buy/sell agreement is necessary regardless of why you are selling. This contract needs to show who will purchase and have control of the operation, how it will be funded, and who will obtain the proceeds of the deal. Also, this contract needs to specify how the business assets and control will be allocated among your living associates and beneficiaries.
If there are no interested buyers amongst your family or employees, you could choose to sell to an outside party. Interested buyers could be current business owners, competitors, or a buyer who wants to purchase an existing establishment. If this strategy is suitable, it will require the assistance of an experienced business broker, tax advisor, and an attorney to help manage the sale and assist you in finding an interested buyer.
Going public with company stock may be another feasible option for selling your operation. This strategy could allow you to realize liquidity, and still let you keep some control. But you must understand that when you publicly sell stock, you are legally responsible to place the interests of the shareholders at the forefront. Like all exit plans, selling public stock takes comprehensive planning. You will be under the close scrutiny of financial professionals and investors, so it is essential to build a strong track record.
Obviously, your family business is a an essential component of your financial success, so it is imperative that your exit plan fits inwith your overall financial plan. It is important for you to plan in advance, and consult with a professional financial team to help you accomplish your personal and business objectives.
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