Exiting a Business Considerations

The following information and views are related to owner operated businesses where the owner is a key part of the business creation and day to day operation.

Call Richard at 479.689.4455 Ext 11 for any additional information or needs. You can also fill out our contact form.

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Ways to Exit – Which is the best direction for you to take?

Liquidation
Liquidation has the lowest return to the owner. The cash received will generally be lower than market value as the buyer pool will be small and what demand there is will be attracted to the lower distressed value. If there are creditors, they will most likely have first claim on cash received. The value of goodwill, intellectual property, phones, websites, social media, customer lists will basically evaporate.

Liquidation Over Time
In this scenario the owner runs the business in a way that maximizes profit while depleting inventory and selling off non-essential equipment. The value of goodwill, intellectual property, phones, websites, social media, customer lists will basically evaporate.

Keeping the Business in the Family
This approach to exiting a business has many components that must mesh well to be successful. There is first identifying a family member(s) that would like to take over the reigns. Then there is the training, the transition planning and the financial aspects of it This requires the right person(s) and needs to be done in a way that doesn't create long term riffs in the family structure..

Sell the Business to Key Employee(s)
Selling the business to a key employee requires an employee with the ability and desire to take over. They would also need to have the resources to fund the purchase. If they don't then you would need to provide generous seller financing options. There could be tax advantages to this approach and you might like payments over time to supplement retirement income. If you are planning on purchasing or starting a new business, you will most likely not have the capital required to do so.

Sell the Business to Another Business
There are businesses that are considered strategic buyers that find value in other businesses to grow their business or enter a new market. Maintaining confidentiality is critical in this arena as often this will be a competitor to some degree. Most competitors can grow their business for less investment than buying a competitor.

Sell the Business in the Open Market
There is a large market place for businesses that want to sell which means there is competition. To rise above the competition in the business for sale market. The business needs to have value by being priced correctly, be bankable and have the least amount of risks for the new owner..

Exit Planning: A good exit plan will help you decide what is the best approach for you to exit your business. The planning can be complicated and the process can take years.

To get started you can call Richard Roberts 479.689.4455 Ext 11 directly for a free no obligation consultation. Additional Information

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