Are you considering selling your business? Here are some alternative exit options.
For those who have a lot of cash, it’s a great time to buy a company. On the flip side, it’s not a great time to be selling one. If you aren't in a rush to unload your company, then consider alternative ways to exit your business.
In this economy, banks are still recovering and are of little help to business owners. Small business mergers are now slowly making a comeback. That means businesses need to find more creative ways to bow out. Here are a few thoughts to help you sell your company and get some dough:
Have realistic goals. Know the market value of your business. Let's say you have a service-oriented business and are looking to retire soon. If the average selling price is two times your yearly revenue, it's going to be a challenge to find a buyer when you are asking for five times that, says Morris Armstrong, a financial planner with Armstrong Financial Strategies. Keep your ideal scenario within reason.
Offer the sale on an installment basis. If capital is in short supply, selling is easier when you are able to work with some flexibility. Offering the sale in installments over time could end up having a set of very attractive tax benefits for you as a seller.
Stay on as a consultant. Have you considered selling the business with the proviso that you remain an advisor? “This gives you the benefit of current income, the ability to oversee that your baby is being run the way that the buyer said they would, plus a period of transition as you go from hectic to normal,” says Armstrong. This option gives you a long, more controlled goodbye.
Sell to your employees. Maybe an external, third party buyer isn’t the right fit. Consider selling the company to the people that helped you grow your business -- your employees. An employee stock option plan, or ESOP directs up to 25 percent of its annual payroll before taxes into an ESOP trust. As pre-taxed money, it can be used to purchase a plethora of investments, like company stock.