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There
are many options when it comes time to exit a business. You can sell the
business to a third party, arrange for your family to take over, have key
employees buy you out, or you may even decide to "gift" the business
to charity. The majority of business owners choose option number one - selling
their business. It pays real dividends to consider which option will best fit
your goals for the future. Depending upon which option you choose, your strategy
and preparations will change.
Sale:
The most common method one thinks of when considering an exit. You sell
your company to an outside entity, obtaining the best price you can. This is the
quickest way out, but may not always be the best. (More)
Family
Transfer: Many businesses are passed down from generation to generation. This
type of transfer requires the same amount of planning and execution as a sale to
a third party. (More)
LBO:
A leveraged buyout, usually by management, is financed by a bank or other
financial entity. These can be difficult to arrange in today's economy but worth
looking into. (More)
MBO:
This is a management buyout without the leverage. You can expect to take less up
front, with more payments spread out over time. You are at risk if the company suffers a
setback. (More)
ESOP:
An employee stock option program provides a gradual exit and can bring more
options to the table. Making the employees owners of the company has benefits
for all parties, but must be structured correctly. (More)
Private
Equity Recapitalization: This requires a longer time horizon, but can provide
greater value at the end of the day. A private equity group will bring more than
cash to the table, including relationships, management ability, experience and
other benefits. (More)
Gift
or Charity: In
some cases, an owner may not be as interested in getting payment for the company
as they are in reducing their tax liabilities and "doing good." (More)
Public
Offering: For
companies with strong growth potential, a public offering may offer a way to
transfer ownership to the public. This can be accomplished by a full IPO, a
reverse merger with an existing public entity, or a direct public offering. (More)
Liquidation:
Usually considered the least appealing exit strategy, a liquidation can
nonetheless provide a way out. (More)
Securities offered through
Independent Investment Bankers Corp. a broker-dealer, Member
FINRA/SIPC.
Redtail Advisors is not affiliated with Independent Investment Bankers Corp.
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