June 23, 2017 | Business law

Omaha Business Attorney talks about Business Planning and Exit Strategy

Written by Frank E. Younes, Partner of High & Younes, LLC
Originally published for The Firm Business Brokerage magazine.

Business Planning – Know Your Exit

An exit strategy may be the last item you consider when operating your current business or buying a new one. However, there is no question that, at some point, it will be a crucial piece of your return on investment.

Many exit plans exist, but only one is the best for you and your family. It is a necessity to determine which exit plan is best from the beginning, especially when involved in a multi-member organization.

Different types of exit plans include:

1. A succession plan
2. Transfer of ownership interest to an heir during the owners life, or upon death
3. Transfer of ownership interest to another member
4. Sale of ownership interest to a third party
5. Liquidation and dissolution of the business.

A properly developed exit plan will provide benefits to any business, including:

1. Improve the probabilities of success
2. Increase the valuation of the sale price
3. Prevent Complacency
4. Provide a timetable for growth
5. Provide realistic goals for growth
6. Prevent litigation

Many unexpected events may cause need for exit, which if not properly planned could result in disagreement among partners, conflict, litigation, confusion for family, dissolution of the business, forced sale at a lower than desired price, and decreased profitability. Such events include:

1. Unexpected offers to one or more members
2. Health or family crisis
3. Age or retirement
4. Market changes
5. Death of the sole member or one of multiple members
6. Partnership disagreements and failing outs

An exit plan is extremely important for all businesses.

In multi-member organizations customized planning in partnership documents can prevent conflict surrounding the buy-out price, or sale by one partner to a third party. In the event of one partner buying out another partner, voluntary or involuntarily, conflicts can be avoided by including either a pre-determined purchase price or calculation of a purchase price within the organization’s documents. Further, decisions regarding right of first refusal, tag-along and take-along should be made in the organization documents to guard against conflict when a partner receives an offer for purchase of his/her ownership interest. Such determinations provide all members the option of exit or purchase when changes occur in the ownership structure.

I urge any business owner(s), whether sole proprietorship, partnership, LLC, or corporation, to protect themselves and their business by investing in an appropriate exit strategy.

You may contact the law offices of High & Younes, LLC., at 402-933-3345 for a free consultation.

About the Author: Frank Younes

Frank Younes is a Nebraska native who earned his Juris Doctor from Creighton University School of Law. Prior to that he obtained a Bachelors of Science in Business Administration. The combination of these types of education has provided him with a sharpened focus on applying his legal education to the business world. While attending law school he gained additional legal experience working as a law clerk in the District Court, where he assisted the District Court Judges in determining the outcomes of various types of cases. He then went on to be mentored by one of the most respected members of the Omaha legal community. Frank’s business acumen and expertise is highly regarded by those with whom he has worked.

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