What are the Exit Options?

What are the Exit Options?

April 1, 2021 by investor

There are several ways to exit a business.

You can sell the business to another company or investor.

This provides liquidity to the owners.   

The downside is, it’s not clear what happens to the employees and the direction of the company.

You can develop an employee stock ownership plan.

This transfers ownership to the employees and brings tax benefits plus rewarding the employees who now have control.  

The downside is that the valuation will most likely be lower than an outright sale.

You can use a management buyout. This provides liquidity to the owners.  

The downside is the process can take some time to complete, even years.

You can transfer the business to a family member.

This provides the family member an income and potentially a career.

The downside is there are estate tax consequences that must be considered.

In exiting your business, consider the impact not only on yourself, but also on the employees, customers, and others associated with the business.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.