Not all business owners, even those who are investing in startup companies today, plan to stick around forever. Whether as a way to make money, pass the business on to someone in the family, or simply retire, there are dozens of reasons why someone may want to get out. For those business owners who no longer want to be involved in day-to-day business operations, an exit strategy is a necessity.
What Is an Exit Strategy?
An exit strategy simply refers to a business owner’s strategic plan to sell or dissolve their company. Typically, this is done in order to liquidate the business and increase the owner’s personal assets. However, there are numerous different reasons why an exit strategy may be considered, as well as numerous different exit strategy types.
Exit Strategy Options to Consider
The exit strategy that you decide to pursue will depend on your personal goals, needs, and vision for your business. That being said, some common exit strategies include:
- Mergers and acquisitions. The amount and value of mergers and acquisitions are on the rise, as this seems to be one of the more profitable exit strategies, especially for those who want their business to live on.
- Sell to an individual. Another option for exiting a business is simply to sell to an individual. This can be a great option for someone who wants to cash out, but doesn’t want to “sell-out” by merging with, or being acquired by, a bigger company.
- Pass to a family member. For those who are nearing retirement age, passing the business along to a family member, such as a son or daughter, is often the most desirable plan.
- Go public. Another way to step away from your business is to open it up for an IPO – initial public offering.
- Liquidate. If you just want to get out of your business and fast, liquidation may be your best option. This means simply shutting down the business and selling any parts of it that you can.
- Take a backseat. Finally, a final option that you may have not considered is to step aside from the business by hiring someone else to manage it for you without actually selling it. This will allow you to continue to reap profits from the business without having to actually run it.
Meet with our Financial Planning Professionals for the Guidance You Need
If you are a business owner, having a financial planner on your side who is business savvy is a smart idea. At Harvest Financial Planning, LLC, our team of professionals are ready to serve you. To learn more about exit strategies for businesses and what our team can do for you, please call us directly or send us a message telling us more about your situation.