• Author Chris Hadjiyianni
  • Year Date 2017
  • Location Waterloo
  • Category Business


When business owners start to think about exiting their companies, the number of possible Exit Paths can seem limitless. In reality, there are only eight:

  1. Transfer the company to family member(s).
  2. Sell the business to one or more key employees.
  3. Sell to employees using an employee stock ownership plan (ESOP).
  4. Sell to one or more co-owners.
  5. Sell to an outside third party.
  6. Engage in an initial public offering (IPO).
  7. Retain ownership but become a passive owner.
  8. Liquidate.

Which of these Exit Paths do owners intend to use?

  • 59% of owners anticipate a third-party sale.
  • 30% anticipate a transfer to the next generation.
  • 31% anticipate a management buyout.
  • 6% expect to sell to an ESOP.

This white paper examines the advantages and disadvantages of each Exit Path and describes a process that enables owners to choose the best Exit Path for them.

Let’s begin with a fictional-company case study.

Ben (55), Tom (45), and Larry (35) purchased Front Range Powder Coating from its former owner. They paid book value of about $1 million. Now, seven years later, they are at a crossroads: Ben is interested in reducing his role in the company and has approached Tom and Larry about purchasing his one-third interest. However, there’s a kicker. Ben is not interested in selling his interest on the same basis as he acquired it (book value). Instead, he wants one-third of the company’s fair market value.