For business owners: An overview of exit options

If a business owner is considering ending their business or no longer wants to be involved, they have several options for how to “leave” the company. Choosing the right option always depends on the circumstances and type of company, financial situation, goals of the owner and of course the current market situation. In this article, I have listed the main options for you:

Sale of the company

• Sale to a strategic investor – This is especially suitable for companies that may be attractive to competitors, suppliers, or companies in related industries.
• Sale to a financial investor – Financial investors are looking for profitable companies with growth potential. Companies that have a stable cash flow and a strong market position are especially suitable.
• Sale to employees (management buy-out) – Employees may be interested in taking over the company, especially if they have a long history in it and knowledge of its functioning. This mainly concerns the company’s top management.
• Merger with another company (merger)

A merger can be a solution if the company is a suitable complement to another company. This can be a way to ensure business continuity for employees, with the owner receiving a share in the new merged company or financial compensation.

Lease

If the owner does not want to sell the company, but also does not want to continue to actively engage in it, he can choose to lease, whether operations, real estate or know-how, etc. However, this option is rare in practice and more difficult to implement (except for real estate leasing).

Company liquidation

• Voluntary liquidation – If the company does not have serious liabilities, the owner can decide to liquidate it and resolve liabilities to creditors and employees. After liquidation, the remaining assets can be distributed among the partners. The owners can so-called sell off the company’s assets.
• Insolvency – If the company has debts, the liquidation process can turn into insolvency. However, this process is expensive and may not always be financially beneficial for the owner.

Transferring the business to family or trusted individuals

If the owner has family or long-time associates who could take over the business, a family transfer or sale to partners may be considered. This can simplify the process and ensure the long-term operation of the business.

Choosing the right option will depend on the specific circumstances of the business. It is important to consider the tax aspects of selling or transferring the company, as well as the legal obligations. It is always advisable to consult with experts such as lawyers or advisors on these matters.