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An appropriate exit strategy to the business owned by a private person is crucial when he or she is ready to retire or to pass on the company to family or a partner. Understanding what is necessary and how to exit the market are both essential in formulating the plan and working towards that goal in the end when the company is no longer as important to the owner.
Formulating the Plan
Before the owner of the company is able to implement any exit strategy, he or she must research how to complete his or her association with the business. If this involves another partner, clients or customers, then the individual will need to determine the best way to either break the news or pass on the company to the other person. This may even involve a succession plan as an exit strategy. Other owners will sell the business after setting up a campaign, attracting attention and interviewing potential owners. The plan usually takes the form of one of these ideas or strategies when the owner knows what he or she wants to do.
Selling the Business
Once the owner determines he or she wants to exit the company through a sale, he or she will need to start a certain track of actions. This usually starts with understanding the numbers of sales, losses and other number-related matters. Then, he or she will need to advertise with the numbers to the local area or through online sites for business owners or someone wanting to enter into the local market. After the current owner attracts attention, he or she will set up interviews and tours of the facility and look over the numbers. It is only then that he or she will single out a person for a possible sale.
A Succession Plan
Some owners will provide an opportunity for family to take over the company when the owner is ready to retire and exit the business world. Before he or she is able to accomplish this goal, the current owner will need to assess the possible family members. Then, the individual will need to train to try taking over. This requires months or years working through the smallest part of the company with the least responsibilities to the highest part. Then, the owner will need to sit back and let the individual take over for a time when he or she thinks the family member is ready.
The succession plan could call for a partner or a general manager taking over. In many of these situations, the individual is already part of the company. This employee may become the next owners normally when the family is unsuitable or cannot learn sufficiently to become the next owner. In some cases, the current owner must explain his or her decision and fight the family about the succession plan. Others will plan for the employee to take over, implement most of the plan and then ensure the paperwork is ready. At this point, some owners will die before explaining the matter to the rest of the family.
Partners or Additional Owners
Some companies are part of a larger ownership scheme. If the owner wants to exit the business, he or she may need to plan ahead by using the company articles of organization or operations documents to sell his or her interest or piece of the whole. The legal and operational paperwork created for the business may specify how to exit the company and what to accomplish while doing so at the same time. Some individuals may need to provide the opportunity for the other owners or partners to purchase the interest or stock before outside parties are able to.
If the company has a specific partnership with one or more partners, the individual wanting to exit the market may need to provide the opportunity to buy the interest to the partner or partners first. This may progress to a business loan supplied by a financial institution where the owner leaving receives the funds. Other situations may lead to a pay as you go arrangement. The more involved the partners are in each other’s lives, the more likely a less formal agreement is possible.
The Business Lawyer in an Exit Strategy
In most situations, the owner of the business will need a business lawyer to exit the company with fewer complications and problems. The lawyer will protect his or her rights and help prevent legal violations or breaches of contract.
Provided by HG.org