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You have started your business and made it profitable through innumerable sacrifices and wise business decisions. You have expanded and hired employees, and now you are starting to think about taking a permanent vacation and retire. However, you may not know the best way to sell your business in order to help your business continue to succeed and to give you the final paycheck that you deserve.
Business Succession Strategies
There are multiple ways to design your business succession plan, each depending on how your final goals. These designs include using estate planning strategies to pass down your business to your children, Buy-Sell Agreements, going public through an IPO, selling to a competitor or a manager via an Asset Purchase Agreement (in which the buyer does not assume the debt) or an Equity Purchase Agreement (when the seller does buy the debt), or selling to your employees through an ESOP.
Business Succession Preparation
Each of these options require different strategies to prepare for and to put into effect. Many of these options require months or even years of legal and business preparation, so it is important to consult with me well in advance of your targeted date to sell your business. It is essential that you properly plan and implement this exit strategy, as it will aid you in your negotiations to sell your business and will position your business to continue to be profitable into the future. Some unfortunate situations that occur from poor planning is the inability to arrive on a purchase price (because of inadequate record-keeping) or a dip in the company’s profitability (and the resulting dispute about the company’s valuation and purchase price). Many of these issues can be avoided with proper foresight and planning.
I am thinking about selling my business, what do I need to do?
The first action that you need to take is discuss your plans with a business attorney and your accountant. There are multiple methods to sell your business, and each require different preparations and structures before you sell your business. Speaking with me and your accountant will help you know what you need to do to be best prepared to sell your business, make the most profit from the sale, and make the sale as smooth as possible.
What are my options to sell my business?
Among other options, you can sell your business to a partner, a local competitor, an interested person that you do not know, your management team, and your employees. You can pass your business on to your children or other family members. You can also decide to take your company public or even simply let your business simply stop functioning. There are other options to transitioning out of ownership of your business, and I would invite you to meet with me to discuss what option is the best for you and your business.
What do I do if I want to give my business to my children?
That is certainly an option! First of all, you of course want to verify that your children are interested in running the business after you give it to them. You will then want to determine how you want to transition ownership to them, whether as a sale, a type of gift, or as part of your estate plan. Each of these options will look and function differently from each other.
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