Thu, 1 April 2021
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
There are several ways to exit a business.
You can sell the business to another company or investor.
This provides liquidity to the owners.
The downside is, it’s not clear what happens to the employees and the direction of the company.
You can develop an employee stock ownership plan.
This transfers ownership to the employees and brings tax benefits plus rewarding the employees who now have control.
The downside is that the valuation will most likely be lower than an outright sale.
You can use a management buyout. This provides liquidity to the owners.
The downside is the process can take some time to complete, even years.
You can transfer the business to a family member.
This provides the family member an income and potentially a career.
The downside is there are estate tax consequences that must be considered.
In exiting your business, consider the impact not only on yourself, but also on the employees, customers, and others associated with the business.
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