Probably you focus on building your business more than paying any attention to the planning of leaving it – one day. But failing to plan for your transition out of your business can result in undesirable results. Turning the page is never easy, but it’s a reality entrepreneurs often has to face. The first step in a successful business succession planning process is to look at the available options and decide which one best suits your needs. We picked the most realistic exit strategies for entrepreneurs who want to put up their small business for sale or pass it on.
- Passing the business to a successor
In this case, the successor can be one of the investor, family member or employee manager in the company.
- Reduces third-party involvement
- Gives you the possibility to maintain involvement and influence in business
- It can be difficult to categorize the right successor
- Potential for conflicts at work and/or in the family
The first step when choosing this option is to establish the ideal profile for your successor. Then, identify and evaluate possible candidates using measurable criteria.
- Transferring ownership through a management buyout
The management team resources to acquire all or a part of the company. This is one of the best options for owners who don’t have a candidate for succession or who want to preserve the corporate culture of the business.
- Limited due diligence required
- Rewards management for their long-term support
- Protects heritage and business independence
- Management often has limited access to capital
- Failed purchase attempt can affect business morale and routine
- Selling the business to an outside investor
There are several options for business owners who are looking to sell their business.
- Initial Public Offering -The sale and/or issuance of shares in a private company on a public stock exchange.
- Private equity-The sale of shares to a financial investor.
- Sale to another business ( Merge or/and Acquiring by)
This is a good option for shareholders looking for a clean exit and the highest possible value.
Before making a final decision, make sure the type of transition you choose will be aligned with your company structure and future ambitions.