Exit Options | The Biz Knows

Exit Options

Some businesses end by choice, while others are forced to close due to inadequate financial and/or operating conditions. Current and desired future positions will dictate which exit options are viable for a particular organization. Seeking professional advice from someone such as an accountant, attorney, and other experts is suggested prior to making a decision.

Liquidation – Take inventory of your company assets, and then work with a qualified appraiser to establish a liquidation price (usually about 20% less than retail value). Proceeds must be used to repay creditors, what's left gets divided among owners.

Acquisition – If there’s another business that wants to buy yours, in most cases the sale is initiated by the interested company. If offered it may be your best exit strategy and is also the most common. A major pro is that you set the price and an interested company is usually willing to pay more than anyone else.

Selling – Unlike an acquisition, in this case placing the business on the market is initiated by the owner. Be sure to define everything intended for purchase including assets, customer list, support, etc.

Transfer Ownership – All rights, titles, etc. of the business are transferred to another person or entity. This is usually used when someone retires and wants to pass the business down to a family member.

IPO – Initial Public Offering provides an opportunity for the public to purchase shares of a company.

Bankruptcy – This is usually a last resort. Since Corporations, limited liability companies and partnerships are separate entities, they can file chapter 7 or chapter 11. Since Proprietorships are just an extension of the owner, chapter 7, chapter 11, or chapter 13 may be filed. As with the others choices, seek advice from an attorney to determine the best one. There are bankruptcy options that allow for continuation of the business.

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