Internal Transfer Series: The Options Quadrants - Which One Do You Fall Into?


[fname], today I want to raise your awareness of available Exit options. It starts with considering the ownership structure, and moves to named or likely successors. By seeing Exit Options many different ways, owners of privately-held businesses can begin to picture the type of Exit that will work best for them.


Or, alternatively, they will realize that their Optimal Exit will be a greater challenge than originally thought. Either way, thinking about exiting your business is a healthy and necessary exercise and should be performed routinely until a plan is firmly in place to protect your illiquid wealth.

Private business owners often think of their Business Exit strictly in the context of an outright sale, when in fact, selling out isn't the only way to turn shares into cash. For an owner in this mindset, Exit Strategy Planning becomes a source of discontent, particularly when co-owners, children or successors are involved. The process need not be confusing or discouraging; a basic understanding of available options helps ease the way for a successful Exit.


We have therefore created a quick-reference chart to start business owners down the right transfer road, depending on the individual situation. This is by no means a short-cut, but merely a starting point.

The chart shows, at a glance, where Exit Strategy Planning and succession planning intersect.

Sole Owner Options

Sole Owners without successors, generally speaking, possess the widest range of Exit options. In other words, they aren't limited to one 'buyer' but can pick and choose from a variety of interested parties and thereby attain the highest price. On the other hand, the highest price may not be the Primary Motive.


For instance, an owner may want to cash in some chips but also keep his job. This situation calls for a 'partial exit', such as the sale of a majority stake. Or an owner may intend to make a charitable gift. The key attribute of this owner is flexibility; it's his business and he isn't locked into handing it to any one successor.

Sole Owners who have designated successors have limited options in that they may only transfer their businesses to a successor through Gifting, an Employee Stock Ownership Plan (ESOPs) or a Management Buyout. An owner's financial situation may considerably influence the outcome.


For example, independently wealthy owners can afford to Gift shares whereas owners dependent on the proceeds from the business may look to a management buyout or an ESOP as a means to hand down the business to a successor. Timelines may also come into play. If an owner needs immediate liquidity, an ESOP or Management Buyout may present the most practical solutions.

Co-Owner Options

Co-Ownership further complicates the Exit Strategy Planning Process. Not only does one owner need to contend with his own Exit, he also needs to consider how his decisions impact the other owner(s).

In a co-owned business made up of non-family, non-successor owners, the parties need to collaborate and form an Exit Strategy that meets the needs of all involved. This, of course, is easier said than done. Shareholder agreements may dictate much of the process. And often, minority co-owners hold little practical say in the direction of the business, including their Exit. Care must be taken in this scenario to balance the interests of all co-owners.

The most complex Exit situation involves a co-owned business in which family members and/or successors exist. We refer to this as 'no man's land' because, depending upon business circumstances, succession planning issues tend to run very deep and can be extremely difficult to reconcile. In these cases, we recommend that owners seek the advice and counsel of a trusted advisor who can referee the varying personal and business concerns. Once all Goals are taken into account, a collaborated Exit Strategy can proceed while minimizing conflicts of interest.


This information was intended to direct your thoughts towards a feasible exit strategy. No matter the ownership dynamics or business concerns, a thorough understanding of one's options goes a long way toward forming an optimal Exit Strategy that meets one's Personal Exit Goals.


As always if you need some advice, you're welcome to email me of call me here at the office at 281-993-4530.


Regards, Charlie


Charles Wilson, CPA/CFF, CGMA, CBEC

Charles Wilson, LLC

307 S. Friendswood Dr, Ste B-2
Friendswood, TX 77546
281-993-4530 (O)
866-567-3975 (F)





Charles Wilson, CPA/CFF, CGMA, CBEC is a Certified Business Exit Consultant and is affiliated with Pinnacle Equity Solutions, Inc., an Exit Strategies Training and Solutions company.  Parts of the content in this email are taken from previous Pinnacle Equity Solutions, Inc's. newsletter library and website in accordance with Charles Wilson's certification in Pinnacle's Certification and Membership Program. All Copyrights are the properties of Pinnacle Equity Solutions, Inc. and Charles Wilson, LLC and their respective owners.