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Exit Options for Entrepreneurs

Exit Options for Entrepreneurs

We love working with entrepreneurs.  They have an infectious work ethic, and have great stories about how they started and grew their businesses.  They speak about their companies with the same pride as parents speaking about their children.

When we ask them about their plans for the future, the goal is almost always the same: achieve a successful exit.  The paths to achieving an exit can be quite different.

Many entrepreneurs feel the most logical path is to sell their company, either to a private equity group or strategic acquirer.

Other entrepreneurs with adult children in their business choose to pass the business down to the next generation.

Recently, we’ve worked with some entrepreneurs who chose a third option: hiring a professional operator (aka a “Hired Hand”) like a President or COO to run the business.

The third option is an interesting one, because it can still leave the first two options intact.  A professional operator can:

  • Help increase the enterprise value of the business and allow it to be sold with a management team intact – both potentially leading to a higher exit multiple. 
  • Serve as a bridge between the entrepreneur and the next generation (as well as teacher and mentor) which may not quite be ready to run the business. 
  • Potentially lead a management buyout of the business, or allow the entrepreneur to become the chairperson of the board overseeing the business.

If you’re an entrepreneur considering an exit, take a moment to see if that third option feels right for you.  We’d be happy to discuss further.