An essential element of creating any business plan is to include an exit strategy--the plan for how you will leave your business at some point in the future. Even if you expect to stay with your business for the long haul, an exit plan is crucial. The business succession planning process is in itself complex, and the personal, legal and tax implications of the various options can be difficult to navigate without the help of a qualified professional, especially if investors are involved. Investors will make their decisions based in part on the investment exit strategy that is included in your business plan. The experienced business lawyers at Carosella & Associates can advise you on which strategy (or strategies) may be right for your business. Exit Strategy Options Before you choose your exit strategy, it is important to understand the basics of each option. For each of the options you take into consideration, making a short list of the capabilities and resources you will need to have in place can help you decide which option to choose. IPO If you choose to do an IPO (initial public offering), a portion of your company will be sold in the public markets. Typically, you and your management team will remain in place for a period of years. Investors and managers are usually able to sell some stock, and your company will continue to operate much as it has in the past. Keep in mind that the company will have to adhere to additional regulations, such as Sarbanes-Oxley requirements, with Wall Street analysts and institutional investors scrutinizing your performance. Trying to go it alone with an IPO can be a grave mistake. It is absolutely essential to have qualified, seasoned business attorneys in your corner who can determine if an IPO is an appropriate exit strategy for you. Strategic Acquisition In a strategic acquisition, a company purchases your business, either with cash and/or stock in the acquiring company. The buyer may or may not retain you and your management team, and will sometimes make substantial changes in your company's operations, staff, and line of business. One benefit of strategic acquisition is liquidity. If you sell the company to a strategic buyer you may be able to sell most or all of your stock. A drawback of this exit strategy is that you will most likely relinquish operating control. Management Buyout In a management buyout you will sell the company to current managers. This type of transaction is frequently financed with some combination of debt and/or private equity investment. It offers immediate liquidity to the owner, early shareholders and investors, and allows the company to continue as a private enterprise. While this exit strategy marks a change of ownership, it gives shareholders some liquidity and can provide a smoother transition for the company, its employees and investors. By planning your exit early on, you are placing yourself in a position to steer your business toward its desired outcome. Carosella estate planning lawyers in Montgomery and Delaware counties can also help you determine which exit strategy will best protect your family’s interests, allowing you to focus on building a thriving business. #BusinessSuccessionPlanning, #ExitStrategy, #BusinessPlan
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