As a business owner, you’ve worked hard to build your company. But at some point, you’ll want to exit the business, whether it’s to retire, pursue new opportunities, or simply take a break.
That’s where an exit plan comes in. An exit plan is a roadmap for how you will eventually leave your business. It should include your financial goals, your timeline, and your preferred exit strategy.
There are a number of different exit plan options available, so it’s important to choose the one that’s right for you and your business. Here are some of the most common exit options:
- Sale: Selling your business to another party is one of the most common exit plan options. This can be a good option if you want to exit your business quickly and get a lump sum of cash.
- Initial public offering (IPO): An IPO is when you sell shares of your company to the public on a stock exchange. This can be a good option if you want to raise capital to grow your business or exit your business gradually.
- Management buyout (MBO): An MBO is when the management team of your business purchases the company from you. This can be a good option if you want to ensure that your business continues to be run by the same team after you leave.
- Employee stock ownership plan (ESOP): An ESOP is a retirement plan that allows employees to own shares of the company. This can be a good option if you want to gradually transfer ownership of your business to your employees.
- Liquidation: Liquidation is the process of selling off all of your business’s assets and paying off its debts. This is usually only done as a last resort if your business is failing.
Other Exit Plan Options
In addition to the common exit plan options listed above, there are a number of other options available, such as:
- Family succession: If you have family members who are interested in taking over your business, this can be a good option for your exit plan.
- Strategic partnership: In a strategic partnership, you partner with another company to achieve common goals. This can be a good option if you want to expand your business or exit your business gradually.
- Merger and acquisition (M&A): In an M&A, your business merges with or is acquired by another company. This can be a good option if you want to exit your business quickly or if you want to partner with a larger company to achieve your goals.
How to Choose the Right Exit Plan Option
The best exit plan option for your business will depend on a variety of factors, including:
- Your financial goals: How much money do you need to get from your exit?
- Your industry: Some industries are more attractive to buyers than others.
- Your personal preferences: Do you want to exit your business quickly or gradually? Do you want to retain some ownership of your business after you leave?
Once you have considered these factors, you can start to narrow down your options and choose the exit plan that is right for you.
How to Get Professional Help
If you need help choosing the right exit plan option or executing your exit strategy, you may want to consult with a professional, such as an M&A advisor. An M&A advisor can help you assess your business, identify potential buyers, and negotiate the best possible deal.
Choosing the right exit plan option is an important decision that can have a significant impact on your financial future. By carefully considering your options and planning ahead, you can increase your chances of a successful exit.
Michael J Schwantes is President & CEO of Creative Business Services/CBS-Global.
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