Options for Business Owners Exploring Exit Opportunities

Looking to Reduce Risk, and Increase Liquidity

Business owners have a myriad of business exit options. In this article, the author posits that selling the business may not be the best option, and discusses the options business owners may want to consider to suit their goals.

The Moment You Start Thinking About an Exit

It usually starts quietly. A colleague hangs up the proverbial hat and heads somewhere warm after you bought their book of business in a take-it-or-leave-it deal because you thought it would give you the boost to meet your financial goals. You watch a competitor get acquired by another competitor or bought out by a private equity firm. Or maybe your spouse looks at you over dinner and says, simply, “You’ve worked hard enough. It’s time.” Any of these situations can cause a business owner to realize it is time to retire and cash in on the years of hard work. Whatever the trigger may be, the thought eventually arrives and many business owners scramble to patch together some sort of exit to secure their legacy and financial security.

The moment that the idea of a well-established business owner on main street may be seeking the next phase in his or her life, either by mentioning it to the wrong person, posting in the wrong forum, or in a meeting with an advisor, the calls start coming from people looking to buy your business or sell your business on your behalf. Whether it is business brokers, M&A consultants, or investment bankers, everyone it seems knows exactly how to help you sell your business for top dollar and offers a competitive fee structure for the privilege.

For many small- and medium-sized business owners, this presently is or soon will be something that they are going to start experiencing with the forthcoming “silver tsunami”. For those who have yet to hear this term, the silver tsunami is used to describe the forthcoming wealth transition from Baby Boomers to younger generations or other market participants. As part of this silver tsunami, business owners who have worked like dogs for many years are going to finally retire and begin well-deserved retirements.

Before you take any of those calls too seriously, it is worth slowing down and gathering yourself. Selling your business outright is just one option to unburden yourself from the responsibilities and grind of running your own business, and to comfortably enjoy your retirement. For many owners, however, selling their business as quickly as possible may not even be the best option.

Why This Decision Deserves More Than a Broker Pitch

Before discussing alternatives to selling your business, there are a few key pieces of information to consider. Most business owners do not hear it often enough, but their businesses are almost certainly representative of a concentrated position. In wealth management lingo, a concentrated position refers to an investment position that, due to its low tax basis and large embedded capital gains, limits one’s ability to build a diversified financial portfolio.[1] Most advisors consider any single asset representing 25.0% or more of a client’s net worth to be highly concentrated; and for most privately held business owners, that number is far higher.[2] In plain speak, this means (almost) all of your eggs are in one basket.

To highlight the issue with having a concentrated position, think of it this way: imagine your entire retirement portfolio was invested in a single stock, like Apple Inc. If you wanted to diversify your investment position and increase your liquidity, it would be very easy to do so because the market for Apple’s stock is efficient. Nearly 37 million Apple shares traded hands on a single trading day last week. Now, imagine that very same stock, Apple, has no public market, no analyst coverage, no float, no institutional investors, no conference calls, and financial information was hard to come by because, in this scenario, Apple is a private company. While you may be able to market and eventually reduce your investment position in this hypothetical private version of Apple, this is the grim reality for most private business owners contemplating retirement. Their largest asset is also their least liquid and least diversified one. They hold a concentrated investment position without any quick and inexpensive method to diversify their investment position. From a wealth management perspective, undiversified and illiquid portfolios are risky and lack the liquidity that someone close to retirement needs in order to fund their soon-to-be retired lifestyle.

The picture I am painting is not meant to invoke fear but rather is meant to invoke clarity for the average Baby Boomer business owner. From a wealth management perspective, if you would like to have a comfortable retirement, now is the time to plan for it. Monetizing your business in some form is a sound strategy that can help you attain your goal. The hard part now is how you do it.

How Most Owners Think About Selling

When owners decide it is time to explore their options, they typically default to one of a handful of approaches:

1. Listing with a business broker or engaging an investment banker;
2. Advertising in an online marketplace or an industry-specific publication;
3. Leaning on a professional network or trade association; and
4. Waiting to be approached by a strategic buyer.

None of these approaches are bad ideas in isolation. But they share a common flaw: they all funnel business owners toward a single outcome—a full sale of the business. The motivations of advisors that allege they can help get top dollar for businesses are almost universally compensated on commission, which means their incentive is just to get a deal done, not necessarily the right deal. Further, their thinking and contribution to your financial future ends at the closing of your business’s sale.

Alternatives Worth Considering

Before you sign an engagement letter with a business broker, here are six overlooked strategies that may better serve your financial goals, timeline, or legacy.

Personal Line of Credit Secured by Company Shares: If your primary goal is liquidity—that is, cash in hand—you may not need to sell anything at all. A personal line of credit secured by your company shares allows you to unlock capital while retaining full ownership. While this strategy will not work for every situation, for owners who simply want financial flexibility without giving up control, it is an option worth exploring with your lender and financial advisor.[3]

Leveraged Recapitalization: A “leveraged recap” allows you to take meaningful chips off the table while still retaining an ownership stake in the business. At a high level, a leveraged recap involves the company taking on debt, the proceeds go to you as the business owner, and you continue running or overseeing the business. This can be a powerful way to diversify your personal balance sheet without fully exiting.[4]

Employee Stock Ownership Plan (ESOP): An ESOP allows you to sell some or all of your shares to your employees over time, typically through a trust. Beyond the obvious benefit of rewarding a loyal staff who helped build the business you oversee and run, ESOPs come with significant tax advantages for both the seller and the company. They also tend to preserve company culture and continuity in ways that a third‑party sale often does not. The structure is more complex than a straightforward sale, but for the right business, it can be an exceptional outcome.[5]

Sale to an Insider: Sometimes the right buyer is already in the building. A trusted partner, a long-tenured manager, or a key employee may be both willing and capable of taking over; either by purchasing your stake outright or through a structured buyout over time. Insider sales can be cleaner, faster, and more culturally aligned than going to the open market, although they require careful planning around valuation and financing.[6]

Sale or Gift to Family or the Next Generation: If keeping the business in the family matters to you, there are estate planning strategies that allow you to transfer ownership—either through a sale at favorable terms or as a gift—in a tax-efficient manner. This path requires close coordination between you, your financial advisor, accountant, and estate planning attorney. For family-owned businesses with a willing next generation, it can be deeply meaningful and a financially smart strategy.[7]

Divestiture of Non-Core Assets: You do not have to sell the whole business to unlock significant value and get closer to reaching your financial goals. If your company owns real estate, for example, a sale-leaseback transaction allows you to sell the property to an investor and lease it back; converting a fixed asset into cash while keeping the business intact and operational. Similar logic applies to other non-core assets. For example, if you are an attorney that provides mainly real estate legal services but, in the past, also completed estate planning services and no longer seek out such clients, you could consider selling your book of estate planning clients to a competitor that just does estate planning legal services. Sometimes the most efficient path to liquidity is selling what is around the core business, not the business itself.[8]

The Bottom Line

The order of these alternatives to an outright sale should not be interpreted as a list of best to worst. Instead, the idea should be that these alternatives create opportunities to increase your personal portfolio’s liquidity and diversify. As a soon-to-be retiree, your two biggest needs are liquidity and diversification. Further, the six options listed above have the added benefit of maintaining local ownership.[9]

Engaging a business broker to help sell your entire business is not necessarily the wrong exit option. In fact, for some business owners, it is exactly the right one. But it should be an informed choice, made after you have genuinely considered the full range of options available to you, such as the six I discussed above.

Your business has likely taken decades to build. It represents your retirement, your legacy, and in many cases, a significant portion of your family’s financial future. The decision of what to do with it deserves more than a few introductory calls with people who earn a commission when you sign on the dotted line.

Before you go to market, take the time to understand what you actually want: liquidity, control, legacy, simplicity, diversification, or some combination. Then find advisors whose incentives are aligned with your goals. At this stage in your life, it is imperative to increase the liquidity and diversity of your personal investment portfolio to retire comfortably. The best outcome is not the one that closes fastest. It is the one you will still feel good about 10 years from now.

Disclaimer: The content in the article above is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in the content above constitutes a solicitation, recommendation, endorsement, or offer by the author and or his employer.

[1] “Diversifying Concentrated Stock Positions,” by Jacon Greene et al., Neuberger Berman, 8 October 2025, https://www.nb.com/en/us/insights/whitepaper-diversifying-concentrated-stock-positions.

[2] “The Risk of Holding Concentrated Stock,” by Peter Mladina and Steven Germani, Northern Trust, 15 July 2019, https://www.northerntrust.com/united-states/insights-research/2019/wealth-management/risk-holding-concentrated-stock; and “Topics in Private Wealth Management,” by Paul Bouchey et al., in CFA Program Curriculum Level III 2023, Volume IV Portfolio Management, John Wiley & Sons, Inc.

[3] “Leveraging Private Companies to Accelerate Owner Liquidity and Returns,” by Z. Christopher Mercer, https://chrismercer.net/leveraging-private-companies-to-accelerate-owner-liquidity-and-returns/.

[4] Unlocking Private Company Wealth: Proven Strategies and Tools for Managing Wealth in Your Private Business, by Z. Christopher Mercer, 2014, Mercer Capital, pp. 19–41.

[5] Guide to ESOP Valuation and Financial Advisory Services, by Robert Reilly and Robert Schweihs, Willamette Management Associate Partners, 2^nd edition, 2007, pp. 27–40; Valuation for M&A: Building and Measuring Private Company Value, by Chris Mellen and Frank Evans, John Wiley & Sons, Inc., 2^nd Edition, 2018, pp. 260–261; and “This Way to the Egress: What Business Valuators Need to Tell Their Clients as They Create Their Exit Strategy,” by Paul Visokey, The Value Examiner, May/June 2018, pp. 6–11.

[6] Valuation for M&A: Building and Measuring Private Company Value, by Chris Mellen and Frank Evans, John Wiley & Sons, Inc., 2^nd Edition, 2018, pp. 261–262.

[7] “This Way to the Egress: What Business Valuators Need to Tell Their Clients as They Create Their Exit Strategy,” by Paul Visokey, The Value Examiner, May/June 2018, pp. 6–11; and Valuation for M&A: Building and Measuring Private Company Value, by Chris Mellen and Frank Evans, John Wiley & Sons, Inc., 2nd Edition, 2018, pp. 262–263.

[8] Corporate Finance, by SA Ross et al., McGraw-Hill/Irwin, 10^th edition, 2013, p. 917; and Value: The Four Cornerstones of Corporate Finance, by Tim Koller et al., John Wiley & Sons, Inc. 2011, pp. 158–160.

[9] For further discussion see: “Anti-Private Equity is Good Business,” by Matthew Levine, Bloomberg, 17 March 2026, https://www.bloomberg.com/opinion/newsletters/2026-03-17/anti-private-equity-is-good-business?.

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James A. Janos, CFA, ABV, FMVA, is a financial services professional and Director at Paradigm Forensics, LLC. He has 10+ years of experience providing valuation advisory and financial economic consulting services to businesses, legal professionals, and government organizations. Backed by his training and credentials, he specializes in the valuation of intangible assets, intellectual property, and private assets (e.g., private equity, private credit, related investment products, and closely‑held businesses), and preparation of damages analyses to address complex litigation, financial, and tax reporting requirements, and strategic planning and resource allocation needs.

Mr. Janos may be contacted at (857) 990‑9996 or by e-mail to jjanos@paradigmforensics.com.