How to take the right exit with your business

Learn how to plan for an exit strategy for your business with Matthew Beckett, Private Wealth Advisor/Investment Advisor for Coastal Community Private Wealth Group/Credential Securities.

December 2020 ​ 3 min read

This article first appeared in the December 202 edition of the Business Examiner. Read the online edition here.

Have you thought about your exit strategy for your business? Businesses are selling quickly these days, yet many operate without the end in mind, and fewer than 10% have a formal plan in writing. There’s also another important thing to consider, best illustrated by clients of mine and their situation… 

Over many years, my hardworking clients have built a successful business. They’re now in their fifties with a combined net worth of $5 million, and almost all of it’s in the business (which is common). They want the freedom to retire by selling their business and living off the net earnings. 

My clients were considering selling in a few years, but with our ever-changing environment, who knows what their sector could look like then, and what that could mean for their business’s value in the future. 

The point here is that if you’re a business owner wanting to sell in order to tap into your business’s net worth—whether it’s to become financially independent, enter another venture, or pay down debt—you need to ensure you act at the right time (the proverbial “make hay when the sun shines”). This means having a proper plan in place for when that time comes.

Here are some possible exit strategies that will also help you get your net worth out of your business: 

Sell as an earn-out: This would give you the opportunity to work in the business, essentially as an employee with a predictable income, while also enjoying possibly favorable tax scenarios. 

Sell the business to your children:  Keeping it in the family allows for more advantageous terms for the buyer (your children). It also gives you the ability to structure the terms of the sale in ways that can help both them and you.

Sell a stake in the business: You can sell either a minority or a majority stake to an investor (individual or private equity firm as examples). There will be important negotiations involved here, so it’s best to connect with an expert early on. 

Whatever the solution, which can also be a combination of options, it’s advisable to start thoroughly planning for it now and enlisting the help of a financial team of experts. My role is to provide clarity, advice and forethought to your unique business situation and get you to your desired outcome. 

For more info, call 250-703-4165.

Matthew Beckett, BCom, CFP, CIM is Assistant Vice President & Private Wealth Advisor/Investment Advisor for Coastal Community Private Wealth Group/Credential Securities 

*Mutual funds, other securities and securities related financial planning are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.

Other topics to explore:

 Writing a solid investment proposal

 Turn your business debt into an asset

 Accelerate your business's recovery during these challenging times

 The value of partnerships in growing your business

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