The 92% Opportunity: Exit Strategy You've Never Fully Considered

With the economic recovery in its sixth year and the stock market making repeated record highs, many middle market business owners who put off examining exit strategies in recent years are beginning to consider the topic again.

Our smart friends at MB Financial Bank in Chicago recently asked an even 100 owners and operators of businesses about their preferred exit strategy. And, after the 24% who said they plan to keep the operation within the family, the breakdown was roughly in line with feedback we get regularly in the marketplace:

–15% expect they’ll sell to private equity buyers.

–15% plan to sell to managers and/or partners already involved in the business.

–13% figure a strategic buyer, meaning a competitor, will buy their company.

–13% are mulling an IPO.

–12% are undecided.

–And 8% are thinking of selling to their employees, as in an Employee Stock Ownership Plan, or ESOP.

I have spent my professional life, more than 25 years, helping companies structure and execute ESOPs and you might think seeing my preferred ownership format come in dead last in this survey would be depressing. But it’s just the opposite: what the survey numbers suggest to me is, in encountering a business owner of a certain age and level of success, I have a 92% chance of speaking to someone who doesn’t yet fully know the remarkable value proposition represented by an ESOP.

Because rarely have I met a founder/entrepreneur/CEO who was not surprised – and suddenly interested – when the actual benefits of an ESOP were spelled out. That doesn’t mean every owner I talk to ends up doing an ESOP; employee ownership isn’t for every business, especially those with already high levels of debt and those with high levels of employee turnover. But I have found business owners universally appreciate the tax and operating benefits of an ESOP, and that such a discussion causes employee ownership as an option to move up among owners’ choices.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.