I hear that frequently, and good for you if your business brings you satisfaction and a level of income that you are comfortable with.\u00a0\u00a0Nevertheless, there will come a day when you will exit your business, which preferably will be on your terms and in accordance with a carefully constructed exit plan.<\/p>\n
That won\u2019t be the case for most business owners though.\u00a0\u00a0There are presently over 22 million businesses in the United States, of which the U.S. Chamber of Commerce estimates that only 20% will transfer successfully to a new owner. That is one business out of five. Why so few?\u00a0\u00a0According to John M. Leonetti in\u00a0Exiting Your Business, Protecting Your Wealth<\/em><\/strong><\/b>, the answer is several fold, including:<\/p>\n So it is a given that you will need to exit your business at some point in time.\u00a0\u00a0What is the right time, assuming that you as a business owner are now open to the consideration of a transaction?\u00a0\u00a0The answer is when the market will pay you the price you want for your business.\u00a0\u00a0The problem is that you don\u2019t know when the planets will align (economic conditions, the identification of interested prospects, etc.) sufficient to achieve that target price. The key then is to be ready when that day comes.\u00a0\u00a0When might that day come?\u00a0\u00a0It might be more predictable than you think.\u00a0\u00a0A study by Robert T. Slee,\u00a0Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests<\/em><\/strong><\/b>\u00a0revealed that over the last 30 years, the middle of the decade is usually the best time to sell.<\/p>\n There is no guaranty that this trend will continue.\u00a0\u00a0However, it does underscore the need to be ready when the window period of time for a successful exit arises.\u00a0\u00a0You may only get one shot, so being prepared is of utmost importance.<\/p>\n Also consider that many successful business owners\u2019 net worth is comprised almost entirely of the value of their closely-held business.\u00a0\u00a0Simple wealth management suggests diversification in a portfolio, so why would the value of a closely-held business be any different?\u00a0\u00a0David Ryan of the mergers and acquisitions advisory firm Upton Financial Group, Inc. puts it this way, \u201cWhen you have your net worth wrapped up in a business, you have all of your eggs in one basket.\u00a0\u00a0If that business gets into trouble, your net worth can decline precipitously or, in some cases, be wiped out.\u201d<\/p>\n That leads to the possibility of selling part of your business or \u201ctaking something off the table.\u201d\u00a0\u00a0That can be accomplished through a tax advantaged sale to an Employee Stock Ownership Program (\u201cESOP\u201d), partial sale to a private equity group, or a management buy-out (\u201cMBO\u201d).\u00a0\u00a0All of these options, as well as an outright sale, have benefits as well as pitfalls.\u00a0\u00a0Only a comprehensive exit strategy will identify which of these options is best for you.<\/p>\n You will most likely realize the best value for your business only if you engage in a long-term exit strategy designed by professionals that specialize in\u00a0Finding the Exit\u2122<\/strong><\/b><\/p>\n","protected":false},"excerpt":{"rendered":" I hear that frequently, and good for you if your business brings you satisfaction and a level of income that you are comfortable with.\u00a0\u00a0Nevertheless, there will come a day when you will exit your business, which preferably will be on your terms and in accordance with a carefully constructed exit plan. That won\u2019t be the…<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","cybocfi_hide_featured_image":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-411","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n\n