All great things come to an end. Your ability or willingness to continue with your business is no different. Perhaps you want to retire or you want to move on to a new project or business venture but you do not want to simply abandon your current business. Below is a brief summary of some of the ways to transition ownership of your business:
Dissolution and the Sale of Equipment, Inventory, etc. (a/k/a Liquidation):
In this scenario, the business owner typically is unable to locate a willing buyer to purchase the business. Therefore, the business owner generally has two responsibilities: (1) Dissolve the company in accordance with Michigan law; and (2) Sell the assets of the business.
Transfer to a Family Member:
A transfer of your business to family members will likely include a sale. Often times ownership or management of the family business is a coveted role. Without the proper succession planning, the transfer of your business to a family member may become the source of hostility or conflict between other family members.
Sale to Co-Owners or Employees:
A sale of your interest in the business to the co-owners or your employees is likely to be the preferred method to transition ownership of your business. In these situations, the potential buyers are those with knowledge and familiarity with the business; which should provide you some peace of mind that your business is in good hands. There is also the reduced likelihood of disruptions to your business operations by using this method of transition.
Sale of the Business to a Third-Party:
Perhaps your business contemporaries are prepared to reduce their competition or expand their clientele and they would be willing to purchase your business; e.g. assets, accounts receivable, etc.
This is only a sampling of the methods a business owner can use to transition the ownership of their business. The process of transitioning ownership of a business is not typically cut-and-dry, and there is a significant amount of work that needs to be completed to ensure that your wishes come to fruition. In order to best accomplish your goals, you should discuss your situation with an experienced business law attorney.
Zacharia S. Bonham is an attorney at JKY Legal Group, P.C., focusing primarily on Commercial Litigation, Construction Law, Employment Law, and Business Law. He can be contacted for any questions related to this article or other areas of law at firstname.lastname@example.org or (517) 381-2663.