Are you struggling with planning ahead? Thinking about the future is essential for business owners. This includes considering the best business exit strategy for your company if/when the time comes to leave.
There are several business exit strategies to choose from, and understanding your options will help you choose the one most suited for you.
1. Mergers and Acquisitions Deals
Mergers and acquisitions are a popular business exit strategy. They involve selling your business to another company by combining or transferring ownership.
- You can truly leave your business behind. If this is something you desire to do, mergers and acquisitions will relieve you from your leadership position, and you are no longer responsible for the outlook of your company.
- You still have some say over M&A negotiations. When trying to reach a deal with an interested company, you will have some authority over setting the prices and terms of the deal.
Drawbacks of M&A deals:
- The process takes time and may drain your finances. Looking for a suitable company to process an M&A deal takes some deliberation.
If this is your preferred choice, start planning your business acquisition financing strategy with us today!
2. Transferring Ownership to Someone in the Family
For some owners, your biggest ambition may be to keep your business within the family, forming a legacy that continues even when you are no longer leading your business. If you know that this is your desire from the outset, remember to start preparing the next successor early on. This will ensure a smoother transition.
Benefits of family succession:
- Your successor will know your business more intimately. Having a relationship with the next leader will mean you can pass on your wisdom, and gauge how they will lead your company. It also means they will have been exposed to the inner workings of your company for a long time.
- You can still remain involved with your company if that is something you want to do.
Drawbacks of family succession:
- When the line between the personal and professional gets blurred, this could cause disagreements and emotional strain for the family.
- There may not be anyone skilled enough to take over. You may want to pass it on to someone in your family, but what happens if nobody’s good enough? They may run unsuccessfully.
Deciding on a Business Exit Strategy
It’s never easy to think about what you would do when you need to leave the business you have so delicately crafted for years, maybe decades.
However, choosing a suitable business exit strategy takes time. Not thinking through your options may result in the company’s failure. To make sure you evaluate your options well, reach out to a business financial consultant for their input.