California business owners like you have a lot to consider when deciding how to exit your business. There are many options, each one coming with its own benefits and potential drawbacks.
The one you decide on depends entirely on what you need in a future business successor. It also hinges on what is possible for everyone involved.
Selling your share of the company
Fit Small Business examines ways to transfer ownership of your business. Most options involve selling. You could sell to a co-owner or key employee. You could sell to the company itself, or to an outside party. Or, you could pass ownership to an heir.
Selling to co-owners or key employees is somewhat common. After all, these people are familiar with how things run. You have seen them at work, you know their ethics and you can grasp how they will run the company. But a key employee or co-owner might not have an interest in becoming the fulltime owner. Furthermore, they may not have the money to buy it.
You can also sell your share of the company back to the company itself. This works only if your company has multiple owners. Your share gets distributed among the remaining owners. Very little changes with the structure.
Selling to an outside party may ensure that you will get your asking price. But you are taking a risk; you do not personally know the buyers. You cannot tell how they will handle your company or what changes they may make.
Passing ownership to an heir
Passing your business on to an heir is a great way to preserve a legacy. You will likely have strong insight on the heir. You can teach them how to run things from a younger age. But not every chosen heir will want to own a family business, as they may have unrelated goals.
As you can see, each method has its own benefits and drawbacks. You must choose which one works for your needs.