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Business Pathways
Succession
Succession planning or exiting your business is the final stage of the business life cycle. You should carefully plan your exit strategy so you have time to analyze all your options. Having a succession plan will ensure you are prepared for unexpected events, protect or add value to the business, reward your hard work and accomplishments, and provide financial security for you, your family and your staff.
Evaluate Opportunities
You have three main options when exiting your business: transfer ownership, sell to existing employees or sell outright. Each option has its own risks and rewards.
Business Valuation
A professional third-party business valuator can provide you with an objective assessment of your business. This includes not just the dollar value, but also information on the exit process and how to boost the value of your business and minimize any tax implications. The valuator will determine your business's value by assessing its assets, past earnings, future earning potential, profitability and market penetration.
Transfer of Ownership (Family)
Transferring ownership of your business to a family member can help ensure a seamless transition and support business continuity if you stay involved with the business for a period of time. You may feel a great deal of personal and professional satisfaction seeing your family members continue the business's legacy. An accountant can advise you on the tax implications of this exit strategy.
Transferring ownership of your business can potentially jeopardize your financial security, if your successor is not able to pay for the business outright or is not well-suited to take over the business. Business and family conflicts can be exacerbated.
Selling to Existing Employees
An Employee Share Ownership Plan can support business continuity through the transition process and ensure the business remains locally owned and current employees maintain their jobs. This process involves transferring shares to successor employees over a period of time.
Selling Outright
Selling your business outright to a neutral third-party, based on the business valuation you received, can offer a faster transition with reduced emotion.