There are not many absolutes in owning a business, but there is one thing that is absolutely certain….all business owners will stop being business owners at some point…100%. Along with death or permanent incapacity, following are other routes for leaving your business:
Sale to one or more key employees.
Sale to one or more co-owners.
Sale or transfer to children or family members.
Sale to an Employee Stock Ownership Plan (ESOP)
Sale to a third party (full or partial).
Become an absentee owner.
Engage in an IPO.
Liquidate for asset value and close the doors.
As you would expect, there are advantages and disadvantages to each of these exit routes, and other than liquidation, each can require much planning and time to execute in a way that will accomplish all of your goals. And, we have found that most owners have not only goals pertaining to financial security, but also their personal core values and legacy. For example, for one of our clients, transferring the business to his son and key employee (values-based goal) was as important as his financial goals.
It is helpful and important for you the business owner to understand each of these exit routes and how their particular characteristics either align with your plans and goals for the future and how they might not. And, to have this understanding as soon as possible so that you can begin planning for that chosen route (that could change) as soon as possible.