Just last week I met with the owners of a manufacturing company in San Jose, California. Husband and wife had started the business 30 years ago and over the years had brought in their son and brother in law to work in the business. Now well into their 60s, the owners want to retire while maintaining their current lifestyle.

They would like to transfer ownership to their family members if they can be certain of a good retirement income. They are worried about the family’s ability to run the company. Consequently they are considering selling the business to an outside cash buyer.

That was their problem when they came to me. Before making a plan to resolve such a dilemma, it was important to lay some ground work. Ground work that may apply to your business as well. 

Selecting your successor is a fundamental objective that you should decide early in the planning process. Many business owners want to transfer the business to family members, an employee, or co-owner. Only a small percentage want to sell to an outside third party.

Unfortunately for most owners, the persons they first identify as their successors do not usually end up as the ultimate owners. Much effort is wasted riding the wrong horse. Thats why it’s important to understand the options for leaving your business and the advantages and disadvantages of each option.  

Basically there only four ways to leave your business.

• Transfer ownership to your children
• Sale to co-owners or employees
• Sale to a third party
• Liquidation  

Tags: business exit strategy, business successor, departure objectives, financial security, life shaping decisions, retirement, transfer of business ownership