Finding the Exit®

We’re at an interesting crossroad where 78 million or so baby boomers will be retiring over the next 12 to 15 years.  12+ million of these boomers own their own business.  Yet the younger generation isn’t stepping into these businesses nearly as often as day’s gone bye.  Likely 2/3rds or more of these businesses will not be passed down.

Something will happen to those businesses – sale to a 3rd party, sold to employees/ESOP, liquidation among the possibilities.

Few SMBs are prepared for sale – sometimes their house isn’t in order, often the owner isn’t emotionally prepared (sometimes because he hasn’t carefully considered his objective(s), sometimes because he hasn’t been advised of his options).  More often both.

“Perhaps” 1 in 4 SMB owners felt the sale of their business, their exit, was a success, in my experience, many will say it’s fewer.  And most of those successes were in a seller’s market, not when there were 1+ million other businesses also in play at the same time.

Determining your best exit strategy is a big decision – probably the biggest financial decision of your life.  Successful planning your exit is a process to clarify your goals, to understand your options, the pros and cons, and which is best for you.  Generally speaking your options include:

  • Sell the entirety of your business to an outside party
  • Sell a portion of your business to an outside investor
  • Sell to your co-owners
  • Sell to your employees/ESOP
  • Sell or gift to your family members
  • Liquidation
  • A combination of the above

It’s likely the biggest financial decision you will ever make.  You probably shouldn’t treat that lightly.

There will be winners and there will be losers.

Follow this link to hear our Founder & CEO, Jerry Mills speak to this subject on Morningstar or give me a call.

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