Liquidity Events Tied To Succession Planning in a Small Business

Recent market strength has increased the value of many small businesses. Increased values often bring succession planning to the forefront as owners see opportunity to cash out when their business value is at or nearing a peak.  If a business is sold, then the challenge becomes what to do with the proceeds. There are many ways a business can be sold.  Two that come to mind are selling the entire business and receiving a lump sum or selling the business in phases, securing payment over several years.  Choosing which is best might be a reflection of the business’ maturity and/or where the owner may be in his or her career cycle.  Consideration must also be given to the type of business and how business cycles influence valuations.  Said differently, if the value has peaked and is significant, an owner may elect to cash out regardless of where they are in their career cycle. When considering a lump sum, a business owner should reflect on whether he or she wants to stay involved and how that might influence the value.  A Read on! →