Eyeing the Exit: Building Value of a Business for Future Sale

Deciding to build a company in the start-up phase or for a family business, day-to-day operations and growth objectives tend to consume most of management's time and effort. Day-to-day decisions, however, can enhance or diminish the exit value of the business at some point in the future, or can delay a sale. It is plausible that most business entertain the idea of one-day merging or cashing out in a sale of their business through an acquisition of some form. Regardless of the viewpoint, operating the business with a potential exit in mind can steadily increase the valuation realizable in a future sale.

Business Law, Corporate Law, Employment LawLaw @ Tocoba.gaJanuary 9, 2018exit plan, building value

50/50 Ownership Relationships can be Trouble, Plan Ahead

It is not uncommon for a family business, business among friends, or perhaps boyfriend and girlfriend or husband and wife, enter into a business where the two people want to be ‘fair’ with each other and state they will split everything equally – ’50/50. This sounds great in theory, but in reality, as the Delaware Supreme Court has taught us in Philip Shawe v. Elizabeth Elting, the business doesn’t always run smoothly and relationship issues/ disagreements on the direction of the business can get in the way of development. Moreover, growth can stagnate because decisions aren’t being made due to deadlock situations and other persistent problems. Take for example, a business founded by two college friends, that own a business 50/50, although one owner gave one percent to his mother. Aside from being business partners, the two founders were initially engaged. The engagement was called off, and the relationship soured and remained hostile. Despite the breakdown of the personal relationship, the business grew to be one of the largest in its industry.

Business Law, Corporate Law, Employment LawLaw @ Tocoba.gaNovember 7, 2017partnerships, exit plan, succession

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