Many business owners believe an external sale of a business is
the only (or at least the best) exit option. Typically, this is
because business owners recognize their employees or family members
are unable to finance a business acquisition. So exiting owners
often think they need to sell their businesses to outside buyers to
meet financial goals.
However, internal business transfers also offer benefits, and
exiting business owners should consider both options.
There are three primary differences between internal and
external business transfers. First, the driving force behind an
internal transfer is a business owner's motive to pass the business
to someone internally rather than to an outside buyer. Second, in
internal business transfers, business owners frequently consider
tax planning and estate planning along with exit strategies because
internal transfers, as a general rule, allow for more flexibility
in these areas than external transfers. And third, corporate
assets, including future cash flows, are leveraged differently
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