Business Exit Strategies - by Mike Bieza Heritage Oaks Bank

By Premier Professionals on May 22, 2015 at 09:31 AM in Santa Barbara Professional Service Providers
Business Exit Strategies - by Mike Bieza Heritage Oaks Bank
Mike Bieza - Commercial Relationship Manager with Heritage Oaks Bank

    The purpose of this paper is to provide an overview of some commonly used strategies for business owners to consider when they decide to exit their privately held business.  The intended beneficiaries of the information contained within this paper include business owners, banking officers and consultants to the business community.  This information will support a clearer understanding of the issues to be faced when an ownership transition occurs and lead to better decisions.

     There are quite a number of options that can be considered when a business owner is considering an exit so rather than spend time on all of the various iterations we will focus on four of the most frequently used choices: 1) An open market sale, 2) gifting to your family members, 3) management buyouts “MBO’s” and 4) employee stock ownership plans “ESOP’s”.  Each option has specific information relevant to its choice which will be thoroughly explained.  It should be emphasized that every company is different and most business owners only experience this process once, so working with experts in the supporting fields, such as CPA’s, attorneys, M&A advisors and bankers will be necessary to accomplish a successful transfer of ownership. 

     In addition to discussing the four frequently used options we will begin with a chapter detailing the issues that need to be understood and dealt with prior to beginning an “exit strategy”.  We will also cover issues commercial lenders need to understand in relation to the four most common exit options and provide some tools for proper loan structuring.  This will allow a lender to mitigate the specific risks with this type of lending.

     A variety of resources were used to obtain the information that is contained within this report.  The most relevant sources of information were direct interviews with various experts in several fields of study such as CPA’s, attorneys, M&A advisors, business valuation consultants and business owners among others.  Two resource materials were particularly helpful and should be considered recommended reading for anyone interested in furthering their knowledge of this subject.  The book “Exiting Your Business, Protecting Your Wealth, a Strategic Guide for Owners and Their Advisors” written by John Leonetti provides excellent information on a wide variety of topics.  The website accessible at “” has a variety of information and resources on ESOP’s.  The website is managed by the Center for Employee Ownership, a nonprofit corporation supporting knowledge for employee-owned companies.

     At the conclusion of this paper a business owner or commercial banking officer will have a general understanding of the business exit options available to them.  With this knowledge, they will have the ability to refine a strategy, with the assistance of specific service providers, to meet their individual objectives.  Since some of these strategies will take time to execute, it is imperative that planning begins far in advance of the actual execution of the exit.

     Unfortunately, devising an exceptional exit plan is not the only area that needs to be understood.  Because there are people involved who possess varying personalities, emotions and objectives, an understanding of their psychological characteristics will be helpful.  Even some of the best thought out plans can be sabotaged by irrational individuals.    

  • Business Exit Strategy Report – Business-Exit-Strategies-Management-Report.pdf