Exit Options and Transaction Structures
The option set
Third-party sale to a financial or strategic buyer (highest potential price, most control lost, highest execution risk). Internal transfer - family succession or management buyout (legacy preserved, often seller-financed, price frequently lower). ESOP (employees gain ownership, seller may defer tax, company must fund future repurchases). Recapitalization (sell a majority or minority stake, take chips off the table, retain a "second bite"). Charitable structures and orderly liquidation round out the set.
Compare on more than price
Evaluate each option on price, risk borne by the seller, speed, control retained, legacy outcomes, tax efficiency, and certainty of close. These trade off against one another; there is no universally best option, only the best fit to owner objectives.
Structures within a sale
Asset versus stock sale, cash at close versus seller note, earnout, or rollover equity. Earnouts and rollover shift risk back onto the seller; a higher headline price with a large earnout may deliver less than a clean lower offer.
Traps
Assuming the highest price is the best deal; ignoring the seller's post-closing exposure (representations, escrows, indemnities); confusing a recapitalization with a full exit; and treating an ESOP as a valuation play rather than a liquidity and succession tool requiring ongoing cash flow and a trustee.
Rule of thumb
Match the option to the primary objective. Worked example: a $6M-EBITDA manufacturer whose owner prioritizes employee legacy and community continuity may favor an ESOP, which can deliver fair value with potential tax deferral; a strategic buyer may pay more but consolidate and close the plant. The right answer depends on the owner's stated goals, not the spreadsheet alone.