Planning for your business’s succession is an important part of being a responsible business owner. Whether you’re ready to retire and remove yourself from the business or want to put a plan in place in the event that you unexpectedly die, it’s smart to familiarize yourself with the various ways to transfer ownership of your business. Here are five common business exit strategies/business succession strategies to consider—for help designing or implementing a business succession strategy, contact Prosper Financial directly today.
One of the most common ways to transfer ownership of a business is to sell your rights to the business to a co-owner. Of course, this method only works if you are in a business partnership and the partner is interested in purchasing your rights. Otherwise, you may have to sell to another party.
If you are a sole proprietor or your business partner isn’t interested in purchasing your half of the business, another option for transferring ownership is to leave your business to an heir or beneficiary. This is very common for family-run businesses, with an owner leaving the business to a spouse or child.
If your business is owned by multiple parties and you are but a single owner, then one option you have for transferring ownership is to sell your ownership interests back to the company for distribution amongst remaining owners.
In some cases, a business owner may decide to sell their business to a single key employee, or to open up the business for purchase by a group or pool of employees. Selling directly to employees can be more practical than you think depending on the situation.
Of course, depending on the type of business and the ownership structure, another option is to open up your business for sale to an external party. Your business could be acquired by another individual or by another company.
Creating a business succession plan and understanding your business exit strategy is an important part of planning for the future. At Prosper Financial, our experienced team can help you to understand your options and put in place a plan that aligns with your goals and values. Reach out to our business financial professionals today for an initial consultation to learn more.