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Strategic Options / Exit Strategies

Thousands of mid-market companies transition ownership every year, and though the reasons may differ, the goal of the seller is always the same: UNLOCK VALUE TO MAXIMIZE THE PROCEEDS FROM THE SALE OF THE ENTERPRISEThe truth is that all company owners will one day exit their business. When and how to turn this large asset into liquid capital may be the most important decision an owner will face to benefit both personally and financially from years invested in the development of the company. With the maturation of the Baby Boomer generation, most owners will have this opportunity just once. Well-defined options based on facts lead to decisions that will ensure rewarding results. Business owners are experts at operating their companies, but often times lack the knowledge and skill set to achieve their personal exit strategy. VR Mergers & Acquisitions offers the business owner Valued Representation.

  • When is the right time to sell?
  • Is the company ready for sale?
  • How can the company be positioned to unlock its maximum value?

Solutions and options to these and many other questions can be answered by conferring with VR Mergers & Acquisitions and their international network of skilled professionals.

Developing an Exit Strategy

An exit strategy involves developing a plan for passing on responsibility for running the company, transferring ownership and extracting your equity. Since a stable business is worth more than an unstable one, creating a seamless transition is essential to maximize your investment. This requires strategic planning while the company is in good economic health – working closely with your VR Mergers & Acquisitions intermediary and understanding the benefits of Valued RepresentationHere are just a few of the common exit strategies VR can assist you with:

Giving Interests to Family Members

By giving part of the business to family members who are actively involved in the business you can reward them for their hard work and loyalty. Then you can sell the remaining interest in the business and distribute money earned to the uninvolved family members.

Selling the Business to Family Members

This could be a good option if the family member succeeding you is not your immediate family or if only one family member is involved in the business. Selling the business to that member will free up assets to be distributed more equitably throughout the family. This is also a good option if you need the proceeds of the sale for retirement. Selling to family members will keep the business in the family and may provide for a smoother transition.

Non-family Succession

Sometimes ownership succession within the family is not an option for a privately held business. Even when looking outside the family for ownership succession, it is still important to begin planning early to unlock and maximize the value of your business at the time of sale.

Management Buyout

Allowing management the option to acquire your interest in the business is an excellent way to transfer ownership to a group that is dedicated to the business. This may be preferable to having an outside party assume ownership, especially if you are interested in having your business continue in the direction you had envisioned. Management buyout may provide for a smooth transition and little or no learning curve for the new owners. VR M&A can facilitate financing options and structure the transaction.

Employee Stock Ownership Plan (ESOP)

Like the management buyout, an ESOP leaves the business in the hands of people who you know are committed to the company. Whether you are planning for a liquidity event, looking for a tax-favored loan, or supplementing an employee benefit program, an ESOP can offer you many advantages. Valuation issues for an ESOP are unique, having a valuation done specifically for the ESOP is important before making a decision. VR works closely with many ESOP financing sources that specialize in these complicated transactions.

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