This strategy refers to selling all of your assets and closing up shop. In some cases, this is the only option on the table for small businesses. This occurs when the business is reliant on a single person and there is no longer anything remaining to sell.
If you find yourself in this predicament, you will need to ensure your business is salable. You may consider restructuring the business so a buyer is able to properly take over and shorten the transition period.
With this option, business owners take either all or most of their business’s profits over time – this is prior to ultimately closing or selling a business, as opposed to reinvesting profits to enlarge the company.
In most cases, Liquidation Over Time is achieved by facilitating large dividends or salary drawdowns over a number of years prior to winding down a business. Moreover, if owners prefer to forgo an aggressive expansion of their business, in favor of maximizing their current lifestyle, this form of liquidation is optimal.
A lot of small business owners go the route of setting up a limited company, with intentions of keeping their business family-owned. If the business is successful, this guarantees that the owner’s legacy continues on and supplies a living for their heirs.
Your managers or employees may be enthusiastic about acquiring your company. Take time to consider if you believe any of your team members would be interested in taking over. After this, you may consider a sit-down conversation and be clear about what this person will be acquiring, both good and bad. It’s important to show this person your respect and trust with your company’s future.
It may prove profitable to position your small business as a desirable acquisition. Companies purchase other businesses for various purposes, such as using a newly-acquired business to fast-track expansion, adding complementary business activities that can generate synergies, and removing the competition.
An Initial Public Offering (IPO) may be a viable exit option, depending on the type of business you have. When a company has matured to a point that you cannot receive large enough private investments, you may consider an IPO.
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