How To Exit Your Business

Give the Business to Family Members

Over time, you can gradually give ownership and control of the company to your children or other family members. This strategy lets you see how well your children run the business and helps reduce estate taxes at your death.

Sell to Co-owners

You can structure a buy-sell agreement so that the company or your co-owners buy your interest when you are ready to retire. Such arrangements also include provisions for what happens to the business if you become disabled or die while fully involved in the management and operation of the business. If you do not currently have co-owners, you may need to bring co-owners into the business or merge with another company as part of your overall exit strategy. That company may have an owner who could become your co-owner, or you may find another entrepreneur with the financial capacity to become your co-owner and to buy your interest at death, disability, or retirement.

Sell to outsiders

You may sell to outside parties, which may include any private investment group, individual investor, or another company anywhere in the country or the world. The investors or other company may ask or require that you continue with the business for a period of time or act as a consultant.

Sell to Key Employees

If you have key employees, who may be family members, you can structure a sale to them before your retirement. For this type of sale, you can expect to receive a significant portion of the purchase price in installment payments over 5 to 10 years.

Establish an Employee stock ownership plan (ESOP)

An employee stock ownership plan (ESOP) may allow you to transfer all or part of your ownership of the company to your employees. A “leveraged” ESOP may provide you or your estate with a private market for your stock and much-needed retirement income for you or liquidity for your estate to pay for estate settlement costs and estate taxes.

Give the Company to Charity

The charity can sell the business or liquidate its assets over time. If you give the company to a charity outright, you receive an income tax deduction. If you give the company to a charity through a charitable remainder trust, you not only receive an income tax deduction but can receive an annual income for the rest of your life.

Go Public

If your company is large enough and has a record of annual growth that will attract the attention of an underwriter, a public offering can provide you with the market to sell your stock on your disability, retirement, or death. Similarly you could merge with a public company on a stock-for-stock basis so that you receive publicly traded stock that you can sell.

Liquidate

You can liquidate the company by selling individual assets.

Give The Business To Family Members

Over time, you can gradually give ownership and control of the company to your children or other family members. This strategy lets you see how well your children run the business and helps reduce estate taxes at your death.

Sell To Co-Owners

You can structure a buy-sell agreement so that the company or your co-owners buy your interest when you are ready to retire. Such arrangements also include provisions for what happens to the business if you become disabled or die while fully involved in the management and operation of the business. If you do not currently have co-owners, you may need to bring co-owners into the business or merge with another company as part of your overall exit strategy. That company may have an owner who could become your co-owner, or you may find another entrepreneur with the financial capacity to become your co-owner and to buy your interest at death, disability, or retirement.

Sell To Outsiders

You may sell to outside parties, which may include any private investment group, individual investor, or another company anywhere in the country or the world. The investors or other company may ask or require that you continue with the business for a period of time or act as a consultant.