Exiting a business isn’t just about signing some paperwork and disappearing to Portugal (we wish!). If you want to exit successfully, you will need a plan that actually fits your goals, your business model, and your desire for the future.
Why? We hear you ask… Because exiting your business isn’t a one-size-fits all move, and like all things in business, it comes with tax and financial implications.
So, whether you want a clean break, a trusted handover, or just a quieter life (and inbox!), here are six popular business exit strategies to help you make the best decision for you and your business. Like all choices, they come with both pros and cons.
1. Selling to a third party
This is probably the first thing most owners think of: selling the business outright to a competitor, investor, or private buyer.
Pros:
- You might get the highest price (especially if there’s strong market demand).
- A clean break is possible if you want out quickly.
- Opens the door to new opportunities or retirement.
Cons:
- It can take time to find the right buyer.
- Due diligence and negotiations can be long and exhausting.
- You’ll likely need to stay on for a transition period.
- The buyer may change the business you built.
While this is one of the most common business exit strategies, it’s not always the smoothest, especially if you’re emotionally attached to what you’ve built.
2. Management buyout (MBO)
This strategy is pretty self-explanatory. It’s where your existing leadership team buys the business, either through personal funds, investor support, or a loan structure.
Pros:
- Your legacy stays in familiar hands.
- Easier transition for staff, clients, and operations.
- You already know and trust the buyers.
Cons:
- Financing can be tricky for the management team.
- You may need to accept a lower price.
- You could end up helping with the deal structure more than you’d like.
MBOs work best when you’ve already started stepping back and your team has shown they can run things without you.
| Need help planning your exit or setting up the people and systems to exit successfully? We can help you with it all. Get in touch with us at [email protected] for a smooth transition. |
3. Employee Ownership Trust (EOT)
Again, this strategy is what it says on the tin: you sell the business to your employees through a trust structure. It’s also worth noting that this strategy is becoming increasingly popular in the UK and has some generous tax perks.
Pros:
- Full sale of your business is tax-free (if you qualify).
- Keeps the business independent.
- Motivates your team to perform.
Cons:
- Usually not the highest-value sale.
- Not all teams are ready for this level of responsibility.
- Complex legal and trust arrangements.
While this is one of the newer business exit strategies, it’s a good fit if you care more about legacy and stability than extracting every pound of value.
4. Members’ Voluntary Liquidation (MVL)
Another option for exit is closing down a solvent company and extracting the value in a tax-efficient way.
Pros:
- An efficient way to access cash if there’s no buyer.
- Can qualify for Business Asset Disposal Relief.
- Clean, controlled wind-down.
Cons:
- No ongoing legacy, the business ends.
- Assets must be distributed fairly.
- Needs careful planning and expert advice.
MVLs are a smart option when there’s nothing to sell (or no desire to sell) but still value left to release.
5. Passing the business to family
A traditional choice if you work with family, but one that’s not always as simple as it sounds!
Pros:
- Keeps the business in the family.
- Can be structured gradually over time.
- Often emotionally satisfying.
Cons:
- Family dynamics can complicate decision-making.
- May involve discounts or deferred payments.
- Successors might not be up to the task.
As you can probably guess, this strategy only works well when you’ve got capable, interested successors and a clear plan for handing over control.
6. Altering your role (instead of leaving entirely)
Not every exit has to be all or nothing. Some owners step back slowly, reducing hours, becoming a non-executive director, or taking on a strategic role while someone else leads.
Pros:
- Maintains income and involvement.
- Allows for a gradual transition.
- Easier on long-term clients and staff.
Cons:
- Can delay full exit and financial freedom.
- Needs clear boundaries to avoid micromanaging.
- Buyers may not want shared control.
This approach works well for business owners who aren’t quite ready to go but know they can’t stay forever. So, if you’re not in a rush but you want to step back, this should be part of your business exit strategies conversation.
The right choice is your choice
There’s no perfect exit strategy, just the one that fits your goals, people, and timeline. In our opinion, the best business exit strategies are the ones that balance value, continuity, and your personal priorities.
To make the right exit plan for you, start with the outcome you want and then work backwards. Think about money, legacy, your team, your role, and how soon you want to go – and this will help guide your decision.
| Don’t wait to plan. Plan now while you have time and options! Get in touch with us at [email protected] and we’ll help you create the best strategy. |
