Business owners commonly face a dilemma of whether to hold on to their business, continuing to enjoy its financial rewards and the sense of fulfillment and purpose it gives, or cashing in to secure their future and lower their risk profile. Oftentimes, a need for liquidity, either for oneself or for a passive shareholder, may drive the owner to sell before he or she is ready. Adding to the anxiety, the question of when to sell can arouse all sorts of fears that had been suppressed or ignored over the years, such as:
- What will I do with myself after the sale?
- Will I have enough proceeds to support my lifestyle and philanthropic objectives?
- Will the market for companies in my industry get even better than it is now?
- And for some, will my being around the house jeopardize my marital status?
There is a path that a surprising number of entrepreneurs are not aware of, one that lies in that middle zone and lets them keep the cake while taking an outsized slice for themselves – a partial recapitalization. Rather than agonize over whether they are selling too soon, owners should give serious consideration to a recap because it allows them to continue to own and control their company while still addressing any liquidity needs or securing their personal finances.
Meahgan O’Grady – Long Point Capital, Bio
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