No Entrepreneur wants their company to end. But the market is volatile and it’s just another part of doing business. Transitioning your business is often more complicated than just closing down shop. You have to plan effectively if you want to get anything out of it. Here are some of your options.
The simplest answer is often the most effective one. Nobody goes into business with the intention of liquidating their company, but it happens all the time. During the process, there are several things to keep in mind. If you liquidate, proceeds from the sale have to be used to pay off creditors first. What’s left has to be divided among shareholders. You have to make sure everyone gets their due.
Naturally, there are pros and cons that go with liquidation. On one hand, everything has to come to an end and you don’t have to worry about a transfer of control. On the other hand, at most, you will get the market value of your company and a great deal of that sum is shared by a lot of parties.
2. Selling to a friendly buyer
Sometimes you will get emotionally attached to the company. Years of hard work will make you want to preserve that legacy and pass it on. You can pass ownership of the company to someone you trust if they believe they can elevate the business to new heights. Potential candidates include people like customers, employees, and family members. You can even sell it to lower-level managers.
Often the business owner will pass down their company to their kids. This is the simplest way to go about it and it just feels right. You’re preserving your legacy and your children can add to it over time. Unfortunately, there are some problems that go with this kind of transition. They might fight over control of the company, or who gets the largest share. To avoid this, you might want to write down clear instructions during the transfer of power.
3. Going public
They’re flashy and pretty popular right now, so what’s the deal with IPOs? You want your stocks to go public because that will drive up the value of the company. You start by convincing investors that your stock should be worth as much as possible. Those same investors are going to dilute your ownership to the point that you own very little. After that, if you protect your equity, the money starts to roll in.
It sounds pretty simple, but you’re going to need to invest lots of time and effort to start this process. Good professional investors aren’t easy to find. How will you know where to look? Not to mention, there’s a lot of know-how from there on out that you might need. It’s best to seek professional help before considering an IPO. Trustworthy companies like Dean-Willcocks Advisory might be able to help get you on track when going public.
4. An acquisition
Perhaps you want to leave your kids some money without them running the business into the ground. An acquisition might be more palatable in this case. You’re convincing another company to buy your company. In this scenario, you pick the price. If you get the right company, you’ll be seeing dollar signs all over the place. If they see value in your company, they’ll pay up.
However, it might not end well for the company itself. Sometimes the purchasing company won’t manage your former business all that well. The merger might make you and the other CEO some bank, but that doesn’t guarantee they won’t run it into the ground themselves.
You might enjoy the thrill of starting your own company, but ending it can be just as stressful. Decisions you make along the road can have major consequences for the business. How you decide to walk away from your company can be the difference between getting out with loads of money or nothing at all.