Although there is no way for you to know when you will have to part company with your business, you can be certain that it will happen. That leaves only the question of how you will take your leave.
John H. Brown of A&W Tax Service Associates in Brooklyn, New York, a professional exit planner, says he knows of only eight ways to leave a business.
- Transfer the business to a family member.
- Sell it to one or more key employees.
- Sell to key employees using an employee stock ownership plan (ESOP).
- Sell it to one or more co-owners.
- Sell it to an outside third party.
- Engage in an initial public offering (IPO).
- Retain ownership but become a passive owner.
Chances are that one of these paths is best for you, but which one? Whether your retirement is just around the corner or years away, you owe it to yourself to consider these questions right now. “The No. 1mistake in exit planning is waiting too late to begin,” says exit planning professional Greg Austin, CPA, of Business Enterprise Institute, Inc. in Golden, Colorado. Waiting until it’s too late to do a thorough job often forces owners to sell their businesses at a disadvantage.