Ways to Cash Out of Your Business
Selling a business is not an easy thing to do but it could be a great way for a business owner to cash out and pocket a large sum of money. However, it is prudent that the right advice is followed or else severe financial ramifications could occur. Most people start with a simple question such as, how much can I sell my company for? This is typically the question asked when the owner needs an influx of cash. An outright sale is usually the simplest way to handle this issue but it is not always the most beneficial. When it comes to cashing out of the business the options before you are numerous. Here are a few to keep in mind.
There are two ways that an owner can cash out of the business. The owner can sell all the assets associated with the company or they can sell their stock in the company. In most cases the sale of stock will benefit the seller whereas the sale of the assets will benefit the buyer. Asset buyers are purchasing all of the business. This would include the real estate, customers, and the equipment. However, stock buyers are assuming control of the company and are exposed to all the liabilities that come with it. If a lawsuit is brought against the business the new owner would be liable.
If you are asking how much can I sell my company for, then you are probably looking for a way to pocket cash. If this is the case, then you could consider the benefits of an ESOP. The Employee Stock Ownership Plan is a way to reward hard work and loyalty. This option will allow you to set up an independent trust that holds a stock for the employees for as long as they work in the business. The company buys the owners stock and places the stock in the ESOP. If an employee leaves then they are entitled to cash out their stock option. This option requires cash on hand in the event that an employee leaves. This option benefits the owner by paying them for their stock and it benefits the employees.
If an owner is looking to sell the business in the future but does not want to step away immediately they could look at something such as preferred stock or even debt. Preferred stock is something that is sold to a perspective buyer. It places cash in the pocket of the owner and allows the stockholder to learn about the business and gradually assume control. If the business is healthy and capable of taking on debt it can also secure a loan and buy the stock of the owner.
There are several methods that an owner can use to cash out of the business if they so choose. However, the best options depend on the long term and short term goals of the owner. If the owner is simply curious about how much they can sell their company for, then they are typically looking for a cash infusion and thus they do not need to sell off the company entirely.
Are you considering selling your business? We can help you. Visit our Sell Your Florida Business page to learn more about what we can do to help you.