BizSugar.com › Management › Exiting a Small Business Part 1

Owners who are exiting a small business are often stymied by the range of choices in exit planning. Most literature on the topic discusses seven or eight avenues to exit.

A sale to a third party can be to an entrepreneur, private equity (including family offices,) or a strategic acquirer. Internal sales can be to family, or to employees via a Leveraged Buy-Out (LBO- often called a Management Buy-Out or MBO.) There is also a sale to an Employee Stock Ownership Plan (ESOP) or the oldest method in the book, closing down the company.

While the jargon is appealing to those advisors who want to sound smart, most of it doesn’t apply to the 90% of owners who have fewer than 20 employees. For those owners, about half of those options aren’t realistic. Here’s why (or why not.)