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Business Resources - Business Succession

Common Exit Strategies

 

Selling to a Third Party

If you have no family, partners or employees ready or interested in taking over the operations, a third-party buyer may be the answer. Some questions to ask include:

  • Where can you find an interested buyer?
  • Do you want to sell the whole business or parts of it?
  • Does the buyer have the money to pay what the business is worth?
  • If not, can they run the business well enough to make payments on a portion of the purchase price that you finance?
  • What is the most tax-efficient way to structure the sale?

An interested buyer can come from anywhere: your customers, suppliers, even your competitors. There are generally two types of buyers.

Financial buyers: Individuals or companies with money to invest. Some are former corporate executives or angel investors looking for a new project and others are in the business of generating good returns on investments.

Strategic buyers: A competitor, a larger business or a company in a remotely related business. Synergy is an important word to these buyers. Experts suggest they are often the ones who will pay the most for your business if the fit is good.

Apart from finding buyers, another challenge is getting a good price on the open market. Not everyone will offer the money you need to retire on. Your advisor team can help you decide if a third-party sale is the best idea.

Experts also suggest it's often not wise to "test" the open market unless you truly intend to sell. Not only does it make your intentions public, it also drains valuable management time and resources.

Jump to
Passing the Business to Family
Selling to Partner or Employees
Selling to a Third Party
Winding Down the Business
Exit Strategy Concerns

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08/23/2010 16:11:09