Plan your exit strategy: selling your business
Whether you're ready to retire or thinking about a new adventure, you'll need to know when and how to sell your business. A business succession plan can be complicated, and planning your exit could take up to five years. The best advice? Start early.
Updated 
3 min. read
What options do I have for selling my business?
Preparing early for your business’s next steps allows you to avoid last-minute decision-making and gives you an opportunity to explore your options. You have three distinct paths:
Transfer your business to a family member. You can preserve your legacy, but make sure you communicate your plans well to avoid misunderstandings and hard feelings.
Sell your business to employees or management. This ensures a smooth transition because, like family members, they're familiar with the business.Sell your business to employees or management. This ensures a smooth transition because, like family members, they're familiar with the business.
Sell your business to a third party. Selling to outside buyers usually translates into a clean break for you.
No matter who you pass control of your business to, there are a few common strategies for succession planning. The first is an outright sale in exchange for cash or other assets. If you've set up a buy/sell agreement that covers retirement, you'll have a buyer (often an equity partner) contractually obligated to buy the business from you.
Annuities are another possibility. They can provide regular payments to you for life in exchange for transferring ownership of the business to family or selling to third-party buyers. You can also set up a family limited partnership to transfer business interests. Several other strategies can be very complicated. Seek professional advice to find the best approach for your company.
How do I determine my business's value?
Before selling, you need to establish a value for your business (valuation). This can be the most difficult part of the process. While you've worked hard and accomplished a lot, what you believe your business is worth may not match what others are willing to pay for it. A business evaluator can help you determine a fair price for your business by examining your finances and assets, and the prices that similar businesses have sold for. Here are a few more factors to consider:
future potential profits
competitors
intellectual property
customer base
How do I plan for succession and success?
Succession plans vary widely, with no hard and fast rule for what they should include. You may want to consider some of the following:
personnel changes, including a successor
preservation of key skills and information
corporate structure
legal considerations (such as a buy/sell agreement or will)
risk management considerations
communication strategies
financial considerations (retirement income, business valuation, sale price and tax implications)
training considerations
decision-making plan, including conflict resolution
exit strategy, including a timeline
There are financial, tax and even legal implications when you transfer or sell your business, so make sure you know where to go to get the best advice you can afford. Don't be afraid to ask questions about services that professionals can provide, and the costs of these services. Tax experts, lawyers, accountants, insurers and your banker can all help you preserve the value of your business and ensure you maximize your profit. They can also provide advice on ways to ensure a smooth transition for you and the business, helping you know the best time to sell and the steps to take to complete the sale.
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