Choosing Your Path

Strategic acquirers can pay the highest multiple because they can underwrite synergies you can't. They can also be the most disruptive — synergies usually mean people.

• Pros: cleanest exit, all-cash often available, fastest close
• Cons: redundancy in your team, brand often subsumed, customer overlap concerns
• Watch for: hostile diligence, post-LOI re-trades, integration risk you carry in earnout

PE buys a controlling stake and partners with you for a 'second bite' — the equity you roll over participates in the next sale 3-5 years later.

• Pros: second bite often as large as first, growth capital, professional governance
• Cons: new boss, board reporting, leverage amplifies downside
• Watch for: management equity plan terms, governance rights, debt covenants you'll inherit

An Employee Stock Ownership Plan lets you sell to a trust holding shares for employees, with significant tax advantages — and slower liquidity than a third-party sale.

• Pros: 1042 rollover deferral (C-corp), 100% S-corp ESOPs pay no federal income tax, legacy preservation
• Cons: liquidity stretched over years, complex governance, repurchase obligation grows
• Watch for: valuation discipline, sustainable cash flow to fund repurchases, trustee selection

When it works, it preserves what you built. When it doesn't, it loses both the business and the relationship. The work happens before the transition, not during.

• Successor has been operating in the role for 3+ years, not just titled into it
• Independent advisors or board exist before the handoff
• Estate plan, buy-sell, and financing structure documented
• Non-successor family members have a defined relationship to the business (or are bought out)
• Owner has identity and income plan independent of the business