A business owner’s exit is a once-in-a-lifetime transformation.  We’re not talking about selling a house or a car.  This is a complex process that requires the technical expertise of a team of trusted advisors. The key to any successful business exit is planning. It must begin with personal reflection on the part of the owner regarding what he or she wants out of the business exit.  Only then can the owner, along with his advisors, design an appropriate exit oregon coast homes for sale by owner strategy. The five (5) planning steps outlined in this article are designed to help business owners define their personal goals, understand all the transfer options and work with an advisory team to execute a successful business exit plan.

Step 1: Define the Personal Goals of the Owner

Since personal goals intertwine so closely with the daily existence of a private business owner, it only makes sense to begin with the basic albeit crucial question, “What do I want to accomplish with my business exit?” The answer seems obvious–make the most money after taxes and fees.  Often, however, it isn’t this simple. Owners have nourished and raised their businesses from infancy; they typically care a lot about who will take the reigns.  Family members might also be involved in the business.  Their fate will also be dependent upon what the business owner ultimately decides.

Aside from money, other motives for a business exit can include “transfers to family”, “transfers to employees”, “transfers to co-owners”, “partial transfers to gain some liquidity today but still run the company’s day-to-day business”, or “an initial public offering”.  The decision often comes down to a question of liquidity.  A substantial source of liquidity outside the business makes for a much easier choice. 

However, more often than not an owner’s wealth is tied up in the business.  The owner must therefore balance his financial and interpersonal goals in order to find the best possible exit strategy.  Therefore, an assessment of the range of values for the business is the crucial next step.

Step 2: Understand that a Range of Values Exist for the Business

The value of a privately-held business depends largely upon who buys it.  It’s not as simple as watching the ticker tape for today’s stock price.  The type of buyer can impact both the price placed on the shares (or assets) of the business and the tax consequences to the selling owner.  Value (net transfer price) is therefore a “range concept”.