8 Ways to Exit Your Home Health Care Business

8 Ways to Exit Your Business

8 Ways to Exit Your Business

According to Paul Simon, there are fifty ways to leave a lover. We may not be as resourceful as Mr. Simon when it comes to saying goodbye, but we were able to come up with eight ways for owners to leave their home health care business.

1. Transfer to a family member
2. Sale to key employee(s)
3. Sale to key employee(s) using Employee Stock Ownership Plan (ESOP)
4. Sale to co-owner(s)
5. Sale to outside third party (including home care business brokers)
6. Initial Public Offering (IPO)
7. Retain ownership but become passive
8. Liquidation

Depending on your unique circumstances, any one of these paths may be appropriate. During the three-step process outlined below, you will harmonize your exit objectives with the unique strengths of your company and the evolving realities of the marketplace. Establishing thoughtful objectives is the first step of you Exit Plan, and doing so well in advance of your departure gives you and your advisors the time necessary to make your goals a reality. Many owners choose to avoid this sometimes difficult process. But if you wish to “leave your business in style”, choosing the correct path is key.

Step One–

First, you and your advisors must identify your most important objectives–see Issue 2 for more about identifying and prioritizing objectives. These objectives are both financial–“how much money will I need to meet my and my family’s needs?”–and non-financial–“I want my company to stay in my family” or “I want to remain involved in the business.”

Internal and external considerations will impact your choice of exit path. For example, you may wish to transfer the business for cash but are unwilling to put your company and valued employees’ fates to an unknown third party. In that case, you may decide that an ESOP or carefully-designed sale to key employees is the best exit path. Exterior considerations may include business, market, or financial conditions.

Step Two–

You must accurately value your company and determine its marketability. This analysis will provide you with further direction and help eliminate unnecessary exit paths. For example, if your company’s value is high but its marketability low–perhaps due to an anemic home health care market–you may decide that an outside party sale is impractical and instead choose to sell to an insider (co-owner, family member, or key employee).

Step Three–

The final step involves evaluating the various tax consequences of your exit options. This evaluation will include factors such as business entity and any changes that must be made. To use a third party sale example, if it would involve a sale of assets and your company is a “C” corporation, the adverse tax consequences might indicate an ESOP sale as a more appropriate choice.

Using this three-step process will help you narrow your list of exit options. And if more than one route remains, you and your advisors must conduct open and frank discussions about the pros and cons of each path.

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About Risa Baker

Risa is Managing Director of PARTNERS 31. Her natural enthusiasm and years of industry experience will successfully guide your business, whatever its size or specialty, through every aspect of exit planning, from strategy to sale.

One Response to “8 Ways to Exit Your Home Health Care Business”

  1. Andrew Rogerson September 8, 2012 9:36 am #

    There may be 50 ways to leave your lover per Paul Simon but the best way to leave your business is successfully. To leave your business successfully you do it on your terms which means always running your business as if it is for sale, then having an exit plan so you leave on your terms, in style and successfully.

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