Page 24 - TACC 2025 Program

Considerations around potential exit

strategies for founder-owned businesses

in 2025 and beyond

Baby boomers account for approximately 21% of the U.S. population — and 70% of baby
boomer business owners will be retiring in the coming years. Baby boomers own millions

of businesses, many of which are middle market companies. What will happen when a
large wave of boomers retire, and many of those businesses suddenly flood the market?
And do these business owners have an exit strategy in place?

Many of them don’t, which could mean they won’t be able to extract the value they want
in an oversaturated M&A climate in an unpredictable economy. That’s why it’s important

for owners of middle market companies to consider these potential exit strategies in
order to maintain the value and legacy of their business. Here are some potential exit
strategies to consider:

Full vs. Selling to a Strategic
Partial Liquidity vs. Financial Buyer

Full liquidation of a business entails a 100% When considering the type of outside buyer who
complete sale of the company ownership, sold might be best for an exit strategy, two options are
to an investor. With full liquidity, the complete strategic buyers and financial buyers. Strategic
change in ownership control can be represented in buyers are interested in the long-term benefits of
a cash/stock deal or an asset purchase. In partial the company fitting into their own business plan.
business transactions, the company’s owner They are more likely to aim for a 100% stake in the
remains involved in the operations to some extent. company. Financial buyers, often private equity
The owner might be able create a liquidity event firms or family offices, are more interested in the
and monetize their investment partially while potential financial return achievable by buying
benefitting from potential future growth, along with the company or a controlling stake. They might
the investor. be buying into the company’s expected future
earnings and often want the current team to
continue to run operations.