Building a business and running it successfully is the goal for the millions of entrepreneurs around the world. It can take a lot of work, but is a very rewarding experience and can be incredibly lucrative.
But while thinking about the operation of your business, you also need to think about your exit strategy. No one can run a business forever, and you need to have a plan in place for when you decide to move on.
Of course, enlisting the help of business brokers to sell your company is often a good idea, but which exit strategy should you use? Well, this article is going to go over a couple of options to help you decide. Read on to learn about some of the best possible exit strategies when looking to sell your business.
Sell the Business to an Individual
One of the most common options is to sell your business to an individual interested in buying it. In many cases, an owner will begin by reaching out to family members, company managers or other peers. This can often be a quicker and easier sale, and could still allow you to maintain a bit of involvement in the company if you’d like.
Of course, make sure the person fits the profile of the successor you are looking for. You should neve just sell it to someone because you know them. This could lead to the failure of the business, which no owner (past or present) wants to see.
In addition to selling or passing on the company to a familiar face, you can also sell to an outside individual. With the help of a business broker or other professional, you can come in contact with individuals looking to purchase companies. This is a great option for those who want to simply get paid out, and move on to the next stage of their lives.
Of course, whoever you sell to, it’s important to get a fair amount for the company. There are several different methods for determining the selling price for your business, so familiarizing yourself with them is a great way to arrive at the right price.
Get Acquired or Join a Merger
Another common option is for your company to become acquired or participate in a merger. First, we’ll look at an acquisition. This occurs when one company purchases another, often to strengthen their own offering.
If you get acquired, it is often from a larger competitor or someone interested in what your company offers to customers. A merger, on the other hand, is when you combine resources with another firm. In some cases you can stay on, but an exit can likely be negotiated as well.
An acquisition or merger is generally one of the best ways to get the most value possible for your company, as most firms have more money to spend than individuals. However, the process can be more complicated and there can be a lot of variables to deal. This includes your involvement going forward, what happens to your brand and name and what happens to your employees.
When some people hear employee buyout, they think about companies offering something to employees to get them to quit. This is a different type of employee buyout, one in which the owner of a company gives their managers and employees the chance to buy the company. A group of employees (whether management or otherwise) can pool together their resources to purchase the company.
Everyone will have a share and thus feel more connected than ever to the business. It also rewards people for their support of the business, and also lets you know that the business is left in the hands of those who have helped it grow.
This is great for owners who want to ensure the culture of the company remains strong, and don’t have a single successor who wants the entire company. Because people might not have access to extensive amounts of capital, the price here might be lower, but it ensures the company continues to operate as normal.
The Right Exit Strategy For You
There are several different exit strategies you can take when looking to sell your business. While everyone might have their preferences, there is no perfect option. The right strategy for one person might be wrong for the next. Be sure to do your research, consult with your family and experts, and arrive at a strategy that works for your needs and preferences.