You’re now at the stage where you’re ready to transition out of your business and have a new generation take over. You have four options you can pursue:
- You can sell your business to an outsider.
- You can pass your business to your managers.
- You can pass your business to your children.
- You can liquidate your business.
All the actions that you will take for business transition will be either one of the actions listed above or a combination of the actions.
Most business owners tell us that they would prefer to pass their business to their children or managers. Unfortunately, most of the time their businesses are either sold to a third party or liquidated. This happens because proper planning and implementation of strategies has not been done.
Our goal when working with business owners who want to transition their business is to help them develop a road map that will help them achieve their goals as well as choose an avenue that makes their life better.
For some business owners, selling to a third party and walking away is what they want. For others, the more gentle method of leaving their business, and one that would make them happiest, is transferring to an insider, whether it’s to managers or children.
Some activities that are often pursued when thinking about Business Transition Planning are:
- Deciding what method you want to use to exit your business
- Putting a road map in place of actions that support your exit choice
- Understanding your options within each choice of leaving your business
- Understanding how an ESOP (Employee Stock Ownership Plan) can often help with both liquidity and transfer needs
- Putting appropriate stay bonus plans in place so buyers or insiders can keep the team together
- Developing a compensation system that leads to a successful transfer of your business
- Understanding your financial needs after you leave your business