By Jana Shoulders
Managing Director, Mariner Wealth Advisors
Member, Women Presidents’ Organization
Many business owners delay exit planning to manage their busy schedules or to avoid the negative emotions associated with retirement. Owners who don’t plan properly often make the same common mistakes when they eventually exit their companies. Below are the top ten mistakes business owners make in exit planning.
1. Waiting to plan until you must sell
Many small- to mid-sized business owners fail to consider exit planning when things are going well for the company. Planning far in advance allows you to articulate your goals, prepare your business for sale, and seek the best possible liquidity event.
2. Waiting for a deal to come to you, rather than proactively seeking the deal you want
Waiting for the perfect deal is like trying to win the lottery. You might get lucky, but it’s not likely. There is an exit opportunity out there that matches your objectives, but finding it will require a lot of time and effort. Unless you take the time to develop and implement an exit plan, it’s unlikely you’ll ever find that deal.
3. Failing to consider all liquidity options
Many business owners believe an outright sale of the company is their only exit option, but an ultimate liquidity event can take many forms, including:
- Management buy-out
- Initial public offering
- Sale to a financial buyer
- Recapitalization
- Sale to a strategic buyer
- Intra-family sale
- Employee stock ownership plan (ESOP)
- Continue to generate dividends
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