Exit Strategies for Entrepreneurs

Summary

• The sale of a business is only one small transaction at the center of a larger plan often referred to as an exit strategy.
• The most successful exit strategies are those that give the business owners the greatest probability of comfort with the results as seen in their financial security, family dynamics and long-range goals.
• There are many options for structuring the sale of the business, and each had different implications for other elements of the broader strategy. Buy-sell agreements can help maintain continuity for remaining owners in a wide range of circumstances. Pure cash transactions typically yield the greatest immediate liquidity. Leveraged transactions may enable managers, partners or family to take over and maintain continuity for the business. ESOPs can provide tax benefits and empower employees.
• Trusts can be valuable tools for managing the income tax and estate planning implications of the wealth derived from a business sale.

Checklist

• Record all exit policies and sales agreements in writing.
• Hire an expert to identify the fair market value of your business before settling on a selling price.
• Work with a business broker who can help simplify the job of selling your business by screening potential buyers before referring qualified candidates to you for more information.
• Consider allowing employees to make the first offer to purchase your company.
• Draft confidentiality agreements to be signed by anyone who takes a close look at your company's operations and records.

Source: http://finance.yahoo.com/how-to-guide/career-work/12818

Topics
Exit Strategies for Entrepreneurs
Laying the Groundwork
Potential Deal Forms to Consider
Managing the Proceeds
Professional Guidance a Must