Options for exiting your business voluntarily are limited only by the imagination of the buyer, the seller, and their advisors.
In broad terms, you can simply wind up operations and sell off your assets, or you can sell your business as a going concern privately or via a public offering. The values realized, complexity, and processes used vary widely within each of these three basic models:
This means ceasing operations, paying all outstanding debts, and selling all assets piecemeal. This can generally be done simply and quickly, unless there are complicated legal arrangements to be untangled.
Liquidation usually yields lower returns than selling an operating business, because nothing is realized for intangible assets such as client lists, goodwill, reputation, and future earnings potential. Unfortunately, it may be the only practical strategy if the owner hasn't done any preparation for an orderly sale of the business.
It may not be possible to find a buyer willing to carry on the business if client relationships and sales are largely dependent on the current owner's direct involvement. This is often the only option for advisory practices owned by sole practitioners, unless arrangements can be made to transition client relationships to someone else's similar practice, selling a client list in the process.
Also read: The Ultimate Business
It may also make sense to liquidate your business if it is only marginally profitable but the assets are relatively valuable. The valuable assets can then be redeployed more profitably.
Although often thought of as inexpensive, liquidation can be costly, depending on the business complexity and marketability of the assets. Finally, remember that liquidation means that all employees lose their jobs and all business arrangements are severed.
Sell the Business Privately
Most businesses as sold as going concerns, through private sales. These are often implemented gradually, where the owners transition through one or more intermediate ownership levels and roles before fully retiring. This is often referred to as a "restructure and remain" strategy.
All private sales that occur gradually should be protected by contingency plans, to protect the seller's interests in the event the new owners default on their payment obligations to the seller. This could involve insurance, or even the right for the seller to resume control in the event of default.
There is no clear best model of private sale that generally allows the seller to realize maximum value. Properly implemented, any of the models below can be effective.Sell to family members.
Sell to co-owners.
Sell to employees.
Sell the Business Publicly.
Selling the company through an initial public offering (IPO) often yields the highest returns to the seller, with most funds provided to the seller directly at the time of sale. But, it is only suited to high-growth companies with high values.
The company will be significantly transformed, in that the legal requirements for disclosure and compliance with security regulations will open the company up to more public and competitor scrutiny than when it was privately held. An IPO is also expensive, with the process often costing 25% or more of company value.