As part of the small business life cycle, at any given time there is a flow of owners looking for an exit as their operations mature and reach new stages. Some are weary of the headache and stress of day-to-day operations and are considering retirement. Others simply want to "cash in" on their years of hard work. Or, in the case of so-called "serial entrepreneurs," they’re looking to take on their next challenge.
The basic options typically considered in such scenarios include seeking a buyer through a broker or investment banker, opening a dialogue with strategic or financial acquisition candidates directly, or pursuing a management, family, or employee buyout.
Owners may also want to consider the option of acquisition by a search fund, a model that has been gaining popularity over the past decade. In this scenario, young entrepreneurs, backed by a strong investment team, take over the company’s management with the goal of injecting new perspectives and of making the business grow.
Certainly any and all options have advantages and disadvantages. It’s up to you as a business owner to determine what’s best for the company given its stage of development, growth prospects, and overall viability.
Knob Hill Partners