Every owner leaves the business eventually. The only questions are when, to whom and on whose terms. Owners who answer those questions early tend to have more choices; owners who wait often find that a health scare, a family change or an unsolicited offer has answered them instead.
The numbers suggest many owners are close to that point. In U.S. Census Bureau survey data for 2018, 51% of responding owners of employer businesses were age 55 or older.1 In the Exit Planning Institute’s 2023 national survey of owners, 73% said they would like to exit their business within the next ten years, while 44% said they had written business goals and objectives.2 Wanting to leave and being ready to leave are not the same thing.
This note sets out the main paths, what each can offer and what each asks of you. It is general information, not advice. Every path below has legal, tax, estate and financial consequences that depend on your own facts, and only your own advisers can weigh them for you.
A sale of the whole business
Selling all of the business, to a company in the same industry, to a private capital firm or to an individual buyer, is the path most owners picture first.
What it can offer: the clearest break, and usually the most cash at closing. A buyer that already operates in your industry, or one that buys to operate, may bring resources the business could not build alone.
What to weigh: you give up control, and with it most of your say over what happens to your people and your name, except what the purchase agreement secures. Price is only part of the deal: how much is paid at closing, how much is deferred or depends on future results, and what you agree to do afterward matter as much. Our note Selling to an operator lists the questions to ask any buyer.
A recapitalization
In a recapitalization, an outside investor buys part of the business, majority or minority, and the owner keeps the rest. The business is often refinanced at the same time.
What it can offer: cash today without a full exit, a partner with capital and experience, and a continuing stake in what the business becomes. For owners who are not ready to step back, or whose successor is not ready to step up, it can buy time.
What to weigh: you gain a partner, and partners have rights. Read the governance terms as carefully as the price: board seats, approval rights, how and when the investor can sell, and whether you can be required to sell with it. Added debt also changes how much room the business has in a hard year.
A management buyout
In a management buyout, the people already running the business buy it, usually with a mix of their own money, outside financing and, often, a note or deferred payment to the seller.
What it can offer: continuity. Customers, employees and suppliers keep dealing with people they know, and the buyers know the business better than any outsider could.
What to weigh: managers rarely have the capital to pay the full price at closing, so the seller often carries part of it and stays exposed to the business’s results for years. The team also has to be ready to run the company without you, including the parts you have always handled yourself.
A family transfer
Passing the business to the next generation, by sale, gift or a combination over time, is the path many family owners hope for.
What it can offer: a legacy kept in the family, and a business run by people who care about it for reasons beyond money.
What to weigh: a family transfer works best when it is treated as seriously as a sale to a stranger. That means an honest view of whether the successor wants the job and is ready for it, clear governance, fairness to family members who are not in the business, and planning for the owner’s own financial security. The estate and tax questions are often the most complex of any path, which is a reason to start early with the right advisers.
Owners who wait often find that a health scare, a family change or an unsolicited offer has answered the question for them.
Other routes
There are other paths, including employee ownership, a sale of part of the business, or a gradual handover that combines several of the above. Most good transitions are a sequence rather than a single event. The right one depends on what you want for yourself, your family, your people and your customers, and in what order.
How to choose
Before choosing a path, most owners benefit from answering four questions in writing:
- What do I need financially, and when, to be secure after I step back?
- How involved do I want to be afterward, and for how long?
- What do I want for my people, my customers and the name on the door?
- Who could run this business without me today, and if no one, what would it take?
The answers rarely point to only one path, but they rule some out quickly, and they make every conversation with advisers, family members and buyers more productive.
Where we fit
Dark Ice Capital buys businesses and real assets to operate them, in the sectors of our eight platform companies. That makes us one possible buyer for some owners on some of these paths, and the wrong one for others. If you are weighing a transition, we are glad to tell you early whether there is a fit, and why. Whatever you decide, decide it on your own timetable, with your own advisers, and in writing.
Sources
- U.S. Census Bureau, “Business Owners’ Ages: Over Half of U.S. Business Owners Were Age 55 and Over,” September 2020 (2019 Annual Business Survey, data year 2018; covers responding owners of employer businesses). https://www.census.gov/library/visualizations/2020/comm/business-owners-ages.html
- Exit Planning Institute, “A Decade of Development,” March 2024 (findings of its 2023 National State of Owner Readiness Report). https://blog.exit-planning-institute.org/a-decade-of-development
This note is for information only and is not an offer to sell or a solicitation of an offer to buy any security or fund interest, or legal, tax or investment advice.