Common Business Exit Strategies
Business exit strategies are a business owners plan to sell his or her ownership in a company. This gives them a chance to reduce their stake in the business and limit losses if the business was not successful. If the business was successful, on the other hand, it could also lead to a significant profit. Many people include an exit strategy in their business plan before launching the business in case the business is not successful. There are different exit strategies that small businesses use; this article introduces different exit strategy options. exit strategies CT attorney, exit planning Connecticut lawyer)
Sell to Another Business
There are different reasons that a company may want to buy another small company, such as expansion or the need to eliminate the competition.
Sell to Managers
It’s possible that the current managers will be interested in purchasing the business. The advantages to this are that they are already familiar with the company and it may motivate them and other employees to work harder and remain loyal. The downside is that although they are familiar with the company, it doesn’t mean that they know how to run a business.
Sell to Employees
An employee stock ownership plan that gives the workers ownership interest in the company. With this plan, business owners can receive tax benefits. The downside, though, is that the transaction value is typically lower because it uses fair market value instead of strategic value.
Initial Public Offering
An initial public offering is when a private company goes public by sale of its stock to the general public. In the long run, this option usually results in a greater return on investment in capital. The downside is that there is usually no immediate liquidity because of the need of a shared lock-up agreement.
If you’re considering which exit strategy best fits the needs of you and your business, make sure to consider the advantages and disadvantages of each option. If you need assistance, there are exit planning CT attorneys who will help you with the process.