Exiting or Selling a Business
What is a successful business exit strategy?A business exit strategy is an entrepreneur's strategic plan to sell his or her ownership to investors or another company. It’s never too early (or too late) to start planning your exit strategy. By not proactively planning an exit strategy, business owners may find that the succession or quick sale of their company may not fulfill their best wishes regarding the worth of the company or the distribution of the company’s assets. The fact of the matter is that no one person or business last forever. Entrepreneurs without an exit strategy will, at some point, exit from their businesses unprepared. Death, disability, family circumstances, and divorce from partners sometimes lead to an early and unplanned exit.
To plan a proper exit strategy, consider the following steps:- Determine the company's financial value and stability. Prepare an accurate account of the businesses and your finances. Consider the legal points, tax implications, and protection of assets. Consult with professionals. Large or small, professional fees will be in proportion to the size of your business.
- Choose the timing of the sale and Plan for your future after the sale.
- Market the sale and speak with investors (there are companies who can assist you in this process). Approach your partners, investors, and stakeholders, if any, to share your intent to exit the business. Create a strategy that advises the partners and investors on how they will be repaid.
- Structure the deal. In a typical small business seller financing agreement, the seller will allow the buyer to pay for the business over time. This is a win-win for both parties, because
- The seller will continue to make money while the buyer can start running the business without a huge upfront investment;
- The seller may also remain involved as a mentor to the buyer, to guide the overall business direction.
- The transition for your employees and customers will be a smooth one.
- Choose new leadership (when applicable). Once you’ve decided to exit your business, start transferring some of your responsibilities to new leadership while you finalize your plans.
- Tell your employees. When your succession plans are in place, share the news with your employees and be prepared to answer their questions.
- Inform your customers. Once you have a buyer, tell your clients and customers. If your business will continue with a new owner, introduce them to your clients. If you are closing your business for good, give your customers alternative options.
- Liquidate and Close the business. It’s hard to shut down the business you worked so hard to build, but it may be the best option to repay investors and still make money. There are two main ways to liquidate your business:
Firstname | Lastname | Age |
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Jill | Smith | 50 |
Eve | Jackson | 94 |
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