Businesses often talk about an “exit strategy.” But one of the more uncomfortable aspects is thinking about how you would pass on your business in the event of your death, or your situation would suddenly change (such as becoming seriously ill)? It is worth knowing the options available to give you peace of mind in a number of potential scenarios.
Passing on to your family
If you choose to pass on your business to your family, it is important to have this discussion as soon as possible. You need to talk to whoever you are considering passing on the business to, both in order to see if this is the appropriate option for you, but equally so that they can gauge whether they would wish to take on that responsibility.
There are both positives and negatives to this option. Passing on to the family can be an easier option compared to bringing in new owners. However, in terms of growth, selling to a new owner may be a better option.
One possible complication is if you have several children. A possible option is giving the children shared ownership, with each one having equal shares or by giving each child a specific role. If there are concerns about potential conflict, you may wish to consider separating different aspects of the business into separate companies.
Selling your business
Selling your business is another alternative. It can cut out a lot of the issues involved with passing on to family members. However, you need to be careful when you sell, while it can be tempting to sell when profits are falling, this can make people think that you are panicking, and this is a fire sale, so you could get lower offers then you would get in better circumstances.
Essentially you should be able to demonstrate that your business offers growth and potential opportunities for a possible buyer. One way to do this is to use the services of a broker. However, as with any service, it is important to compare different brokers available and decide who will be most appropriate for your individual circumstances.
It is also important to value your business in a way that shows possible growth while at the same time offering a realistic valuation that will interest potential buyers.
Updating your Will
It can be difficult, but you should make clear what you intend to do with your business in your Will, including any assets. Aside from the company itself, you should look at any assets. In some cases, you may want to pass it on to your family, or you may request that it be sold, with any fees passed on instead.
It is important to get the right advice, both in terms of any transition but also issues such as taxes, the direction of the business and so forth. If you are considering the exit strategy of your company and are not sure, please contact our specialists today, and we will be happy to discuss your personal requirements in more detail.