In our current fast paced business world, entrepreneurs are usually too busy to plan an exit strategy in advance. But a continuation strategy established years in advance can allow a business owner to realize the best results possible. Comprehensive planning generally assures a successful outcome.
Your choice of how to exit primarily is determined by your specific objectives, and the interests of your successors. There are a number of viable exit strategies for you to consider.
A frequently used option is to liquidate the business. With this plan, you could offer a clear-cut and attractive agreement for successors who have the skills, proficiency or know how that are a major asset to the business. Nevertheless, liquidation often compromises your ongoing financial assets, and some assets may only sell for little of their net value.
Another exit strategy is to pass the operation to family members. But family succession is a complex area of business that should be dealt with carefully. First off, you should take into account your successor's interest and knowledge of the business, and devise a comprehensive training process. You also need to take into account the interests of key staffers, as well as beneficiaries who are not directly involved in the business. In addition, you could either transfer ownership to your heirs as a gift (requires an estate plan), or they can acquire ownership by borrowing the entire amount or by paying you in installments.
You could sell the establishment to your employees or partners. Regardless of the reason for the sale, a detailed buy/sell agreement is a must. This agreement needs to show who will purchase and operate the business, how it will be financed, and who will get the profits from the sale. The buy/sell agreement must also show how your living heirs will divide the assets and operating control.
If there are no interested buyers amongst your family or employees, you may elect to sell to an outside party. Interested parties could be current entrepreneur, competitors, or a buyer who wants to purchase an existing establishment. If this strategy is suitable, it will require the assistance of a reputable business broker, accountant, and an attorney to help manage the sale and assist you in searching out an interested buyer.
Another alternative could be to sell your company stock publicly. Such a strategy may allow you to liquidate and still have a certain amount of control. But when selling stock publicly, by law you must place the needs of your stockholders at the forefront. You should be aware that this strategy takes years of advanced planning and perfect timing.
Obviously, your family business is a an essential component of your wealth, so it is vital that your exit plan is integratedwith your long-term financial strategy. It is important for you to plan in advance, and consult with an expert financial team to help you reach your personal and professional goals.
Your choice of how to exit primarily is determined by your specific objectives, and the interests of your successors. There are a number of viable exit strategies for you to consider.
A frequently used option is to liquidate the business. With this plan, you could offer a clear-cut and attractive agreement for successors who have the skills, proficiency or know how that are a major asset to the business. Nevertheless, liquidation often compromises your ongoing financial assets, and some assets may only sell for little of their net value.
Another exit strategy is to pass the operation to family members. But family succession is a complex area of business that should be dealt with carefully. First off, you should take into account your successor's interest and knowledge of the business, and devise a comprehensive training process. You also need to take into account the interests of key staffers, as well as beneficiaries who are not directly involved in the business. In addition, you could either transfer ownership to your heirs as a gift (requires an estate plan), or they can acquire ownership by borrowing the entire amount or by paying you in installments.
You could sell the establishment to your employees or partners. Regardless of the reason for the sale, a detailed buy/sell agreement is a must. This agreement needs to show who will purchase and operate the business, how it will be financed, and who will get the profits from the sale. The buy/sell agreement must also show how your living heirs will divide the assets and operating control.
If there are no interested buyers amongst your family or employees, you may elect to sell to an outside party. Interested parties could be current entrepreneur, competitors, or a buyer who wants to purchase an existing establishment. If this strategy is suitable, it will require the assistance of a reputable business broker, accountant, and an attorney to help manage the sale and assist you in searching out an interested buyer.
Another alternative could be to sell your company stock publicly. Such a strategy may allow you to liquidate and still have a certain amount of control. But when selling stock publicly, by law you must place the needs of your stockholders at the forefront. You should be aware that this strategy takes years of advanced planning and perfect timing.
Obviously, your family business is a an essential component of your wealth, so it is vital that your exit plan is integratedwith your long-term financial strategy. It is important for you to plan in advance, and consult with an expert financial team to help you reach your personal and professional goals.
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