Exiting your business is one of the biggest deals of your life. There are no “do-overs”. When building your business, you needed to do a lot of running & gunning. Strategic planning and especially business exit planning was far from your mind.
To build equity in your business, you may have built a solid management team you can trust, and must continue to institutionalize knowledge & learning in your company, and make it saleable. Proper, prudent tax, trust & estate planning must include an exit strategy that protects your hard earned equity and is flexible so that your exit opportunities are not curtailed.
Down the road, you may end up finding a strategic buyer or financial buyer, or develop a family buyout or management buyout (MBO) scenario. You may encounter exit opportunities that are structured as an asset sale, rather than a share sale.
Under all scenarios, you will want to continue to hone your management group, and implement executive compensation and corporate tax strategies & structures to optimize execution of a successful exit. Retention of key executive talent is critical, and you may be able to cultivate your management team as a potential management buyout group, which may end up being a convenient default exit option for all interested parties.
Proper, prudent corporate structuring and tax planning is needed to strategically pre-position to be flexible enough to preserve your equity/wealth under the many alternative scenarios that may arise, so that you remain compliant and avoid any faux-pas that might lead to a punitive tax or financial hit. Business owners should seek out top professionals to help develop their business succession or exit strategy, including corporate structuring, executive compensation, tax, trust & estate planning.
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