How to retire from your own business.

by Kelly Deis of SoundPoint Consulting

You started your business 10, 20 or even 30 years ago. It has been good to you. You’ve built it from infancy, fed it, grew it and, in turn it has provided you a comfortable lifestyle.

But, you’re done, or you want to be done. You are ready for the good life that retirement promises. But there is only one catch – there is no playbook for retiring from your own business. 

As a business owner, there are several options available to exit your business. Here are a few.

1.  Work ’til You Drop

Doing nothing is always an option. I know of people pushing 80 that just can’t (or won’t) give up working and/or control of their business. As long as they can get up in the morning, they go to work.

The upside to this option is that the owner(s) continue to draw an income and do not need to fret about selling their business.They also continue to be the key decision-maker, not losing their mark on the business.

But, all things must come to an end at some point. If the business transitions after the owner is unable to work any longer, then the transfer may be less than ideal. Not only is it less likely that institutional knowledge will be transferred, but the ultimate buyer may not be desirous from the owners’ perspective.

If this option is chosen, no need to read further. However, I suggest that the owners’ heirs read on.

2.  Liquidate

It is surprising to me how many business owners think that the only value of their business lays in its assets, be it real estate, equipment or inventory. No, no, no. Unless the business is a pure money loser or a holding company, there is value. Value is in the income stream, customer lists, reputation, and business relationships, to name a few. Do not underestimate the cumulative value of all your hard work over the past years.

The upside to this option is that it is quick and easy. Hire a liquidator and be done with it. No brokers or lawyers need to get involved as there is no negotiation or transaction.

The downside is that not only will all the goodwill you built be destroyed and your legacy ended, but real money will be left on the table.

3.  Sell/Transfer to Family or Management

Another option is to sell the business to your children or management. Generally, these are people whom you have brought along, know the business and will preserve your legacy. Often the seller finances the purchase and allows the buyer to pay it off over time.

The upside is that you know the buyers, so less due diligence is required. If they are capable and motivated to succeed, then all should be good. Also, odds are that they won’t make wholesale changes, thus keeping your legacy intact.

If you are financing the transaction, then the new owners need to deliver. Don’t sell to someone who can’t run the business well just because they are friends or family – your retirement depends on it.

And, if you sell to family members, be sure that ownership, roles, and responsibilities are clearly defined and aligned with capabilities. Just because they have been raised in the business doesn’t mean they can run the business. Nothing is more deadly to family relations than a business deal that has gone awry.

4.  Financial Buyer

You can put your business on the open market and sell to an unknown third party. These people want to own and run a business. They also need to earn a living and get a rate of return appropriate for the risk. They will be investing a large portion of their life savings and possibly taking on additional debt. In many cases there is an opportunity for the seller to stay on as a consultant while the business is transitioned to the new owner.

The upside of this option is that you will most likely cash out at a reasonably fair price and it is a clean break from the business.

The downside is that selling a business is a process that can take away from your daily momentum. Think of it as selling a house, but on a much largerer scale. Not only do you need to get the right professionals in place, but you also need to get your house in order – running well and looking good.

5. Strategic Sale

Your business might be an attractive purchase for a competitor, customer or supplier in your industry. Much like the financial buyer, they require an appropriate ROI. But, presumably they see value in combining your business with theirs. For this reason, they are often willing to pay a premium over the financial buyer.

The upside to this option is that the price is generally attractive. And, since these buyers know the industry, the due diligence process should be reasonably quick and efficient.

The downside is that there is a limited pool of these potential buyers. You will know pretty quickly if you have an interested strategic buyer or not.

Identifying your most likely buyer is an important first step when thinking about your exit strategy. It takes time to evaluate your alternatives and position your business to be attractive to them.


Kelly Deis is president of Soundpoint Consulting, based right here in Kitsap County. She earned an MBA at the Wharton School, and offers services as a Certified Valuation Analyst and Certified Exit Planning Analyst. She also helps clients develop a differentiating strategy. 

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