What do I need to know about exiting a business?

In Business Legal Services

The world of business is one that is constantly changing. Often owners of businesses will wish to leave their position or the company altogether, handing it over to new owners.

Exiting a business is not a decision that can be taken lightly or quickly, however, and on that basis gaining the right legal support is crucial.

When might you plan to exit a business?
In many cases, choosing to hand over the reins of a business is done when another party expresses an interest in purchasing the company for a substantial sum of money. A business owner may feel that the settlement on offer is too good to resist, that they have taken the business as far as their skills will allow or that they simply don’t have the drive or energy to continue. It is not unusual for serial entrepreneurs to start, grow and establish several businesses during a career; keeping things fresh by selling one enterprise and then pursuing a new opportunity or idea.

In other cases, a business owner may sell some or all of their business yet retain their management position within the business. Often this is done to raise capital or as part of a buyout.

What types of exit are possible?
The most straightforward form of business exit is a complete and total sale, taking the money offered as payment for the purchase of your stake in the business.

Another option is to retire from your management role within the business whilst keeping your financial interest in the company alive. This will allow you to access the funds at a later stage and continue to receive dividends where applicable. Alternatively, you can choose to pass your position and interest within a company to a carefully chosen successor or corporate heir.

Can I pass the business on to family?
It is entirely possible to pass ownership of a business to a family member. In the majority of cases handing over the control of a business is seen as a far easier and less disruptive way to exit a business than selling it to outside interests or third parties.

Passing the business to a family member is not an easy decision, however, as you must be sure that whomever you hand the reins to is both competent and able to take the business into a profitable future. There may also be multiple family members who make a case for taking over the business, prompting a potentially divisive decision.

How should an exit from a business be planned?
If you have planned your exit properly then you will likely have done so over a lengthy period and with the consultation of an experienced legal professional.

It may be that you need to take time to find a successor, a company to buy the business or simply to decide whether or not you want to keep a financial stake or management position within the business after you have made your exit.

Who else should be involved in my exit?
Your decision to leave a business may have wider implications for personnel within the business, including partners, shareholders and staff. Again, a legal service provider will be able to make you aware of the impact an exit may have and how best to prepare for such a change within the business.

If you own a business and require legal support in exiting a business, why not compare a range of experienced legal experts now?

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