There maybe someone in your family interested in taking over the business who has the right skills and experience. This isn’t always the best-case scenario of course as family businesses can be complicated. Ideally:
- There is only one family member that wants to take over, avoiding family arguments and conflicts of interest or inheritance concerns. Possibly you may need to split the ownership arrangement with family members or decide who’s best qualified to lead
- The family member who wants the business is already working in the business and eager to learn your role. If they’ve been able to follow you in the business it’s more likely they will understand how the business works and know staff.
Though selling to family may seem easier because you don’t need to advertise the business to find a buyer, it’s often harder to get the highest price or your successor may need you to help finance the purchase.
2. Sell to a business partner or management team
If you have a partner or a senior manager, they may be interested in buying the business or you may have a shareholding agreement where you are already be bound to sell to them.
In this scenario the buyers may need time to raise the money for purchase, so give them as much advance notice as you can. You might consider allowing them to buy the business in stages so check this scenario aligns with your personal financial plan.
3. Sell to your employees
Your employees may be interested in buying the business. Employees make good buyers because they already know and understand the business, hold relationships with your suppliers and customers and likely want to continue the way you ran the business.
If an employee doesn’t have enough capital to swing the deal on their own, you might be involved in helping them fund the purchase.
4. Sell to an outside buyer
This is often the cleanest and best exit by finding another person or company to buy your business outright. You can then leave the business without any obligations (though be prepared to help the buyer with any on-going questions for a period to help the transition).
5. Shut down the business
Some businesses just close down. Either because it’s difficult to transfer any value and find a buyer or the business is under stress and you need to close.
If you choose to close the business you’ll need to liquidate all your assets for cash and then pay off any debts, tax or financial obligations.
6. Keep the business and install a manager
You may decide to keep the business and delegate management by employing a manager to run the business day-to-day. This is a popular option when a business is generating positive cash flow for the owner could draw on as dividends.
Finally, recognize the right time to sell
Good timing depends largely on what the market’s doing at any given time, but there are some indicators that can help you decide if it’s the right time to sell:
- You’re confident of your business’s return-on-investment (ROI) value
- The business has gone as far as you can take it
- The next generation are ready to take over
- There is massive opportunity ahead, but you don’t have the energy to take it any further.