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Tennessee businesses can benefit from an exit strategy

On Behalf of | Sep 13, 2018 | Banking & Business Transactions

Many entrepreneurs in Tennessee looking to start their own small business will first establish a business plan. A business plan can address many important topics regarding how the business will be run and what role the owner will play in it. This can be important not just for the day-to-day operations of the business but also to outline the direction of the business in the future.

However, part of that future for some owners may be eventually leaving the business. They may have an idea for a new business, they may be ready to retire or they may find the business no longer matches their personal career goals. Whatever the reason, having an exit strategy from the get-go can serve a person well in the future.

One possible exit strategy is a merger or acquisition. In general, this means the small business will merge with a similar business, or the small business will be purchased by a bigger business. This could be attractive to larger companies, as it can save resources and provide a more efficient way to see their profits grow.

Another possible exit strategy is to sell to a friendly individual. Unlike a merger or acquisition, this exit strategy does not combine two businesses into a single entity. However, the proceeds from the sale can allow the small business owner to pay investors while still retaining some of the profits from the sale for their own use.

A third exit strategy is to find a qualified person to run the daily operations of the business. The business owner will still own the business and will receive an annuity without having to actually run the business. This is generally only a possibility if you are able to pay off investors and if the business has a stable revenue stream.

These are only a few ways a business owner can exit their enterprise. Having an exit strategy from the beginning can help the process run smoother once it is time to implement that strategy. Those who want to ensure their exit strategy is legally sound will want to seek the advice of a business transactions attorney who can explain what regulations and laws apply.