Nothing is forever, and feeling ready to depart your business for something new – whether that’s retirement, a new position elsewhere, or a new business start-up you feel ready to sink your teeth into – isn’t a feeling we can repress for long.
But exiting a business isn’t as simple as handing in your notice and running out the clock. In most cases, people want to be sure that the business will pass into good hands – that their hard work will be sustained by the next generation of leaders.
There is, of course, more than one way to do this, and what’s right for you and the business will depend on many criteria. Whether you feel sure about your decision or not, the best people to turn to are experienced corporate solicitors who will understand the exact ramifications your decision will have for the business, and its employees.
To get you started, here are 5 of the most popular options, and why they can be so beneficial to the business – and to those invested in it.
4 Business Exit Strategies: Which Is Best for You?
1. Passing the business onto a family member
This one is very common, particularly when the business has been within a particular family for many years – or, in some cases, generations.
Passing the business onto someone in your family often means benefitting from the stability often offered by tradition.
A family name can be an important part of the business’s identity – one that is valued by employees, customers, and stakeholders alike. And, provided the family member you have in mind has spent plenty of time involved in the business, there is practical stability to the decision, too.
The downsides? Passing the business onto a family member can feel like nepotism if the culture isn’t right. If they lack experience and/or passion, then employees can feel (rightfully) disgruntled by the decision, particularly if there is a clear choice for succession already working for the business.
2. Mergers and acquisitions
Mergers and acquisitions can signal the next phase in a business’s life, allowing it to take on fresh interest and expertise, reach a wider network, and diversify its impact on the business world. If you’re ready to bow out, then preparing the business to merge with another successful business can be a great way to ensure it’s equipped to thrive without you at the helm.
Mergers and acquisitions are stressful, and they do take a significant investment of time and energy. From due diligence to reassuring employees and customers during a time of disruption and change, it’s important that you’re prepared for the undertaking.
3. Selling your stake to management, a partner, or an investor
If you can’t find a suitable successor, but feel you already know of the best person or people to take on your stake in the business, then giving them the opportunity to buy out your share can be the best idea. It tends to mean minimal disruption to the business, which can be the best thing.
4. Liquidation
In some cases, none of the alternatives mentioned above will feel right. If you’re ready for a clean break and don’t feel any desire for your hard work to be sustained by someone else, then liquidating the business can be the simplest way to get that final lump sum and move on.
There are some obvious disadvantages to liquidation. Jobs will be lost, along with the business’s reputation, which may have been long fought for.
It’s a big decision to make and one that you’ll want to run past your solicitor well in advance of the final decision.