Selling If you have created a successful business you are proud to be one of the most difficult, the decision to sell it ever make you. However, all entrepreneurs have an exit strategy in place
You're probably aware that traditional exit options :. A stock sale, to find a strategic buyer, or go for bigger small businesses, and public. Some owners may simply decide to relax their business and their doors
But you have another option completely closed -. It is an Employee Share Ownership Plan (ESOP) called, and you can only have to put the exit strategy available, are rooted your business locally and your staff spent.
simply, ESOPs are a tool retiring entrepreneurs, the company can sell to its employees. ESOPs are gaining popularity around the world, and while Canada is no special tax incentives for operators must accept this model, it can explore other good reasons for this option.
Flexible Exit Timeline
We already know that many members of the generation baby boomers are not the age of retirement 65. Many of their work enjoy and want so long to be able to contribute, as they are healthy and be able to do this. This trend is expected to continue in future generations, as more people see work as an extension of their personal lives.
An ESOP allows owners a significant role in the business have continued, but to start with the flexibility their value to reduce the business by transferring this value to their employees. ensures the longer transition period, and the owner is able to educate mentor and key people in their new roles.
In addition to a flexible departure an ESOP also owners access to retirement savings by the liquidity of the transfer of shares to its employees.
What are you about to start your money out of
allowed All exit plans hinge of an illiquid asset turn (the business) in cash. To shop for employee shares in your company, the company must be professional at fair market value (FMV) rated.
FMV simply means "the highest price in terms of money, or pays money to be available in an open and unrestricted market between informed, prudent parties who are not under compulsion to transact and who are dealing at arm's length."
As long as your company is profitable and likely your employees continue to grow, nothing will mind paying a fair price for the shares. While some owners their employees think their company can not afford, there are a number of financial instruments to facilitate the process. leave
a lasting legacy
The research shows that many small businesses are sorry to sell their company shortly after completion of the deal. In many cases they regret their decision, even if they wanted the selling price they receive.
A major reason for this regret that many exit plans fail the issues of succession or bequest to address. For many owners, it is equally important to know that the culture and the values they instilled in their companies continue after they leave. can
An ESOP help the company to ensuring with people who wear share the previous owners Vision and Values.
What's more, research shows that employee ownership leads to increased business results including improved productivity, retention and engagement.
Is an ESOP Right for You?
Employee share ownership for any small business is not suitable, since it requires a shift towards more participatory management and a willingness to share financial information. But for small business owners, a more flexible exit timeline, want a fair selling price and to leave their legacy intact, ESOPs are worth further exploration.
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