Small Business Exit Strategies

Small Business Exit Strategies

Small Business Exit Strategies

The lifespan of a business varies and tends to be shorter for smaller businesses, due to a number of influences. When the time comes to leave or shutter your company, there are a few great options to explore to ensure the time and money you’ve invested don’t go to waste. Below are three avenues of business dissolution to consider.

Sell to a friend

You may have developed a number of business contacts while running a company, some of who may even be friends. Selling your company to a friend may be the best way to separate from it. This ensures that your company is in good hands and that your company’s heritage is protected. Transferring ownership to a friend who shares your goal can ensure that your company continues in the same direction that you envisioned. This method has the advantage of requiring less due diligence because you know and trust your friends. However, it is important to remain somewhat objective and business-minded when dealing with friends.

A buyout

Selling your company to your employees can be a meaningful and generous way to go. Employee stock ownership plans (ESOPs) are a terrific strategy to give your employees a stake in your company. One advantage of utilizing this approach is that you can keep control until you retire. Employees will have a financial and emotional stake in the company so that they have as much reason to root for its success as you do.

Transfer ownership to relatives

Transferring ownership to relatives is an underestimated avenue for leaving a company. Transferring ownership to your children or other relatives ensures your work will benefit those you love and possibly provide them with financial security. These options above are almost always more beneficial than liquidating or closing a business. They will set you up to benefit from the company you built and see it continue to thrive after it is out of your control. It is in your best interest to seek the advice of a business lawyer to make sure you are covering all your bases.


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