Transition Strategies
There are over 2 million small businesses in the U.S. whose owners are aged 55 and over and nearing retirement. For sake of discussion, a small business is defined as having $0.5 to $10 million in revenue. Most of these small business owners lack a succession plan. Many do not have a family member or employee that is interested in or capable of running and owning the business. The small company typically has little excess capital. Few, if any, buyers are interested in acquiring this type of business. If there is a buyer, usually it is difficult for the owner to get a fair value for the business.
There are several possible sale exit strategies for a small company.
1. Inheritance – Family
2. Internal – Manager or Employee
3. Merger or Acquisition• Strategic Buyer4. Go Public
• VC with Successor
• Large Agency
5. Newcastle Consolidation
Small business owner’s nearing retirement have different priorities. Most, however, seek the highest value for their company and highest return when selling their business without taking on too much risk. The best exit strategy to meet this objective may be surprising to most.