YOUR Exit Strategy: “It needs to be hand-crafted by an expert”

YOUR Exit Strategy: "It needs to be hand-crafted by an expert"

Whatever the reasons are for business owners leaving their company, it is essential that they carefully develop an Exit Plan that supports both their personal and business's needs. Creating an Exit Plan is less stressful when owners know and understand their options and realize which way supports the kind of legacy they want to leave behind.

So, what is an Exit Plan? An Exit Plan is a comprehensive document strategically designed to assist in the decision making process and illustrates how business owners will make crucial decisions to successfully facilitate the transition of leaving their business. An Exit Plan also addresses all necessary topic regarding personal, professional, and financial issues relating to the exiting process in conjunction with preparing the business owners, their families, and in some cases even select employees for changeovers. Knowing the significance of an Exit Plan is just the first fundamental step when leaving your company. It is equally important to be acquainted with the top Exiting Strategies, so you can decide for yourself how and when to leave your business. Take a look at the options the BUSINESS HOUSE, inc.^SM has to offer.

1. Intergenerational Transfer

Leaving your business to a member of your family is one of the most common ways to exit your company. Based on expert studies fifty percent of business owners want their successors to be their children.

Pros

• Keeps Business in the Family

• Luxury of Setting the Selling Price

• Tax Advantages

Cons

• Failed Expectations/ Family Discord

• Least Qualified to Operate Company

• Financial Risk & Security

2. Sale to Fellow Shareholders

Selling your company to other shareholders is not always an option for every business owner; however, many shareholders have buyout options because they already have a vested interest.

Pros

1.  

   • Shareholders already know the Business

   • The Business stays in the "family" per se

   • Shareholder is may be ready to execute stock and an asset transaction

Cons

• An inadequate Shareholder agreement could mean that you get less for your shares

• The possibility of not getting the maximum value for the business

• You may be forced into selling your share to a select few

3. Management Buy-Out

Your management team is stakeholders in your business and they are the key to achieving company goals. Selling a business to its management's staff depends on the size of your company as well as the size of your management team.

Pros

• A prepared Buyer is already in place

• Managements is highly qualified

• Possible Stock VS Asset Sale

Cons

• Management may have limited financing options

• A longer transition out of the company

• No money

4. Sell to Employees

If you are considering keeping the sale of your company in house, an ESOP is a noteworthy option. Participating employee will be investing in the company and will have an account in the trust; however, if the employee leaves the company is required to buy back the employee's shares.

Pros

• Employees take pride of ownership

• Fund the M.B.O

• Tax treatment

Cons

• Establishing an ESOP is a lengthy process

• You essential will receive a lower price

• The cost of buybacks when an employee leave the company

5. Sell to a Third Party Buyer

Selling your Business to a third party Buyer is the most common type of transaction in the Merger and Acquisition industry. By selling to a third party Buyer; a business owner will get fair market value for their company.

Pros

• Larger pool of qualified Buyers

• This type of sell creates liquidity for the owner

• Receive highest value for company

Cons

• Owners lose total control

• Longer timeframe

• The hassle of Due Diligence

6. Refinance or Recapitalize the Business

If you have a partner refinancing or recapitalization is a suitable exiting alternative. It allows you to use company assets as leverage to arrange for cash out.

Pros

• The entire company does not have to be sold

• Provides liquidity for owner(s)

• Owners still maintain control

Cons

• Increases Business Risk

• Constrains company growth

• Delays owners Exiting Process

Leaving a business is one of the most difficult experiences a business owner will undergo. Knowing and understanding your Exit options when leaving your company is imperative to your own personal goals, as well as company goals. Every business owner's Exit Plan will vary accordingly to circumstances.

How We Can Help? the BUSINESS HOUSE, inc.^SM will help you develop your Exit Plan as well as assist you in choosing which Exit Option is right for you, your family, and your business. Our proprietary Exit Planning Process is highly strategic and crafted with precision by Jeffery Merry. Jeffery is a certified Exit Planning expert. He incorporates the business' existing practices and coaches the owner on the importance of a well developed process. We are with you every step of the way so that exiting your business does not have to be a stormy process filled with difficulty. To find out more on how we can help, please call 770 534-6630, email our office at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit our website www.theBUSINESSHOUSEinc.com.