Exit Strategy Considerations For Business Owners

If you have been running your business for several years, you have probably considered your exit strategy. Contrary to what many people think, this is not something to leave to the last minute, as an exit strategy requires considerable planning. How much will you take out? Do you want to sell or transfer ownership of the company and its assets to someone else? How will you relinquish control to another person? Here are a few exit strategy considerations worth keeping in mind.

Sell your business

It is crucial to note that selling your business is not an indication of failure. On the contrary, your ability to let go of or sell your business at the perfect time is a smart business move. Different business owners have various reasons for selling their companies, but the most important thing here is recognizing the signs that indicate you need to sell.

These signs include poor business performance, fading passion, receiving an offer you cannot refuse, and having a compelling reason to sell. You can take the time to learn more about the signs to watch for and about selling your business. There are several options for selling your business. For example, in addition to getting a business valuation and looking for a buyer, you can choose to sell to a friend or an investor. 

Liquidate your business assets

A significant benefit of liquidating your business assets is the speed and simplicity it offers. All you need to do is advertise your company’s inventory, land, equipment, and other assets and wait for potential bidders. Then, after accepting the bid you deem reasonable and paying off any creditors you may have, you can walk away with the rest of the proceeds. 

However, you may receive less than you initially invested in these assets and in growing your business. 

Keep your business in the family: have a succession plan

Many business owners prefer the limited liability company route to keep the business in the family. This way, a well-managed company becomes a lasting legacy for the next generation. The most important thing here is to prepare a smooth transition strategy and have a qualified successor to take the reins or inherit the business. 

The merger or acquisition exit strategy

With a merger, two separate businesses combine into one, increasing the value of your business as a result. That is why many business owners tend to prefer this option. Unfortunately, this is not always the best option if you want to sever ties with your business.

On the other hand, acquisitions can be trickier. For example, if you are already running your business with a target or potential acquirer in mind, you risk designing a product or service specifically for that acquirer. That means you will be shooting yourself in the foot if your preferred acquirer is no longer interested in acquiring your business, as you may find it very difficult to find an alternative.