Selling your company to a strategic buyer. Private equity. ESOPs. IPOs. Intentionally defective grantor trusts. There seems to be a dizzying list of different ways to exit from your company. You have likely heard of most of them, and perhaps you are considering one versus another. Yet there might be one undervalued exit tactic that you have not heard of and need to know about. It is called a “non-control recap” in short vernacular (recap is an abbreviation of recapitalization). Here’s how it works and why it may help achieve your exit goals.
Ask a room full of business owners if they need a successor CEO on their team as part of their exit planning, and usually you will hear: “Yes,” “No,” “It Depends,” and “Maybe.” Surprisingly, each of these seemingly contradictory answers can be correct, depending on the business owner’s exit goals and situation. Hiring and grooming a future CEO requires a major effort, and CEO-caliber leaders do not grow on trees. Therefore, it’s important to know if you need a successor CEO to achieve your exit goals because getting this wrong can derail your exit success. Here’s how to tell:
Happy Fourth of July!
To help you celebrate and to provide some light reading while you relax this holiday week, download below any of our free and popular eBooks on helping business owners prepare for exit. While celebrating America’s freedom, learn how to reach your own financial freedom and exit successfully:
If you share ownership of your company but personally have at least 50%, you are probably used to being in control. On issues like company strategy, money, and people, you have the final say. But what about when it comes to exiting from your company? For example, what if you want to sell the business, but one or more minority co-owners do not want to sell? Are you still in control? Probably not. Here’s why.
Most business owners care about more than just money at exit. In addition to achieving their personal financial goals at exit, most owners have other objectives they seek to achieve, one of which is thanking those employees who contributed to the company’s success. While the desire to say thank you is common, most owners struggle with determining the right way to do it. Questions like “Who do I thank?” and “What’s appropriate?” may lack easy answers, especially when rushing to get everything else done shortly before exit. Plus, this issue contains potential landmines; overlook somebody, create perceptions of favoritism, or thank anybody in a manner he or she believes fails to recognize his or her contribution fully, and your best intentions can do more harm than good, adding fuel to the fire during an already sensitive transition. If you intend to thank at least some of your employees when you exit, here are four tips on how to do it the right way.