by John M. Leonetti
John Wiley & Sons Inc., 2008, 238 pp.
Private business owners who need a business exit strategy should read Exiting Your Business, Protecting Your Wealth. With considerable experience in the realm of exit planning, author John Leonetti helps business owners assess their exit readiness in order to choose the option best-suited for their level. This book is not about selling your business. “Believing that an exit strategy is simply the sale of your business is a major trap to avoid,” Leonetti writes. Through a fictional exiting owner named Bill, readers get to explore various exit options and understand how his decisions affect the overall outcome of each strategy.
Exit options include:
Selling the business. This option may provide the highest return, but taxes and fees generated by the sale often reduce the final amount of money received by the owner.
Private-equity group recapitalizations. Through an employment agreement, the owner maintains operational control while selling off a majority of the business. Owners can continue to receive income and participate in future business deals.
Employee Stock Ownership Plans (ESOPs). This option allows an owner to maintain control while gaining some liquidity and diversification. ESOPs can be customized, combined with other options and/or implemented over several years.
Management buyouts. Passing a business along to a management team might be an option for business owners who are financially prepared for their future.
Gifting programs. This option is best suited for business owners who do not want to extract a financial value from their business but instead want to give it to family, employees or charities while limiting tax liabilities.
Regardless of the exit option chosen, technical components will impact the net amount an owner receives. Leonetti’s book can assist business owners (and those who advise them) in choosing the best strategy to protect the wealth of their business while allowing them to choose either an active or inactive role in its future.
By JofA Senior Editor Loanna Overcash