Five Primary Exit Strategies

We’ve written blogs about exit strategies and the importance of having one in place. You can read those blogs here and here. A recent article at entrepreneur.com gives an excellent overview of the five primary exit strategies, plus the pros and cons of each. In summary:

The “Just Take It” Strategy: More appropriate for private companies than for public, this strategy involves the owner of the company drawing a huge salary, giant bonuses, and special shares worth more than regular shares. The owner then has enough socked away to not be dependent on the company after departure.

The Liquidation Strategy: A simple exit strategy, this is when the business shuts down operations, closes its doors, and sells off all of its assets. After a business valuation, of course.

The “Friendly Buyer” Strategy: This involves selling the business to someone who the owner knows will treat it with respect and dignity. The buyer can be a family member, an employee, or even a customer.

The Acquisition Strategy: Many family owned businesses employ this strategy to save the company from second-generation ruin. The owner finds a company that wants to buy the business and sells it to them.

The IPO Strategy: Something of a last resort strategy, this involves taking the company public and convincing investors to invest. IPOs are not only rare (of the millions of companies in the U.S., 7,000 are public) they’re exceedingly complicated. If the owner fails to convince investors, they’ve lost millions, and if they succeed, they’re forever under analysts’ scrutiny.

To read the full article at entrepreneur.com, click here. And as always, before putting in place any exit strategy, be sure to have a business valuation done.

By: Present Value

Additional Reading:

Adjusting Your Exit Plan

Exit Strategies

Tags: Business Valuation, Exit Strategies
Posted in business appraisals | 3 Comments »

Thinking about Estate Planning

Recently, in our post, “… And Then Get Back to Living,” we wrote about the importance of succession planning for every business. Last week, in Inc. magazine, there was a great article, “How to Create an Estate Plan,” which provides a step-by-step guide on the most effective ways to start thinking about planning for the future of a company. It emphasizes that this is something that all business owners need to be thinking about because huge legal issues can arise without a plan for how to pass on all the necessary information about the inner workings of a business should something happen to the business owner.

Some of the important takeaways from the article are:

• Keep an open dialogue with those who will be affected by the plan, such as family members and business partners.
• This is a process that lasts as long as the life of a company and it needs to be continuously refined and updated.
• Find people you trust to work with you on planning, including estate planners, attorneys, accountants, insurance providers, and of course business appraisers.

It’s something to think about because no business owner wants their hard work, blood, sweat, and tears to be all for naught. You can take steps now to ensure the future of your company.

By: Present Value

Other posts you might find interesting:

“Five Myths of Business Valuations”

“Adjusting Your Exit Plan”

“Succession Plans”

“Business Valuations and Estate Planning”

Tags: appraisal, business appraisals, Business Valuation, estate planning, Exit Strategies, Inc., present value, succession planning
Posted in Business Valuation, business appraisals, estate planning, succession planning | No Comments »

Exit Strategies

You’ve worked hard to build your business. Small business ownership is a pursuit filled with extremes – extreme excitement, extreme disappointment, and extreme sacrifice. It’s no wonder that deciding how best to leave your business can also be an emotional decision. Today’s topic takes the emotion out of that decision and simply lays out your options.

The first, and most common exit strategy, is to sell the business either to an individual or to another company. A sale of a company would most likely result in the seller receiving cash in exchange for the business. Another exit strategy is a buyout, in which an individual or group of individuals will buy out your ownership of the business and take over its operation. A third exit strategy is a merger, which happens when two companies get together, determine the value of the two businesses, and form one larger business. Or, if a business owner doesn’t have any debt, he or she might decide to simply close the business and sell its assets.

No matter the exit strategy you choose, the most difficult part of any of these transactions is determining the value of a business. Often, because of the worth of intangible assets, like a business’s reputation or customer base, determining a company’s value is not necessarily a simple pursuit. This is why it’s important to have your assets appraised or have a business valuation performed by a certified appraiser who has experience calculating the worth of a business’s tangible and intangible assets. If you are considering retirement, or a sale or closure of your business, contact the professionals at Present Value to discuss your options.

By: Present Value

Tags: Business Valuation, Exit Strategies, Machinery and equipment appraisal
Posted in Business Valuation, Machinery & Equipment | No Comments »