Find the best solution for you, your family and your business
Your options for exiting your business are as follows:
In some cases, a combination of these options may turn out to be your best option. It's important to seek professional advice to make sure you find the right solution.
You have several choices to consider when leaving your business
Family members can be good choices for successors, but only if they have the desire, commitment and ability to manage the business successfully. Ownership and management are two different things. You may be able to handle both, but your family members may be better off retaining ownership only and leaving business management to others.
If you do select a family member or members as your successor, doing as much advance planning as possible will help your successor build the skills and knowledge he or she needs to take over the helm of the business. The process of grooming your successor will include things such as training; introduction to key customers and suppliers; and managing the transition so there is minimal disruption to the business.
If keeping your business in the family is not a suitable strategy, one alternative is to offer key management the opportunity to purchase all or part of the business. If there are employees who are prepared to take on the risk of ownership, a management buy-out can help ensure continuity of personnel and the business itself.
There are many methods of structuring and financing a management buy-out, including stock options, a buy-out over time, or a financed purchase. Each of these has different implications for your business, taxes and the timing and amount of income you will derive from the transfer of ownership.
You may decide that selling your business to an outside party is the best option for all. Selling your business can create immediate value and also limit family disputes.
A sale can be structured in many different ways, depending on your objectives. Seeking the advice of professionals to help you determine the right approach will help ensure that a sale achieves your most important goals.
Once you have made the decision to sell, you'll need to focus on determining the value of your business and finding ways to improve this value so that you can receive the maximum sale price.
In some cases, you may not be able to find an appropriate buyer or successor for your business. However, you still have the option of liquidating business assets such as real estate, inventory, equipment, customer lists, etc. Make sure you get professional advice to find the best way to dispose of assets and minimize tax and other liabilities.