.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} How do you cash out of your privately owned company when you want to retire, especially if you are in a partnership or a business with more than one owner? According to the Iowa Small Business Development Center Web site, Iowa has more than 100,000 small businesses, and many of them have no established exit strategies.

It’s one of the biggest issues facing the owner of a private company. For small companies where there are no family members who might take over the enterprise, the most obvious exit strategy might be simply looking to bigger firms to buy them.

Selling can be great if you are in a good market cycle, in an attractive region, and have a strong balance sheet and a ready pool of buyers. But what if you want to retire when your industry is in a down cycle and your valuation doesn’t reflect the true value of your business?

Of Iowa’s 100,000 privately held businesses, 25 percent are owned and operated by people 55 and older, more than 10 percent are operated by people 65 or older, and about 600 are owned by people 80 and older.

What if one of your partners dies or is disabled suddenly and there is no buyer for your business at market rates? Would your partner’s ownership interest go to his estate? Do you have the cash on hand to buy out your partner’s spouse or heirs? Could you easily borrow to buy out your partner’s share? What if something happens to you? Would your surviving spouse or heirs have to sell at fire-sale prices?

It is difficult to find the right moment to sit down and discuss exit strategies or contingency planning. However, making the time to determine the best options can save a lot of stress down the road.

Before you begin planning various scenarios, however, it is important for you and your partners to come to grips with what you ultimately want to do with your company, both in the event of a sale to an outsider or in the event that something happens to one or more of the owners. This may not be easy conversation, and it is not an easy decision in most cases.

Even if your ideal exit strategy is to sell to an outsider, creating a partnership agreement can be of great benefit to you and your partners. An attorney can assist you in drafting this document, which specifies what will happen to your ownership stake in the event that one of you dies, is disabled or wants to exit the company. There are several widely used types of buyouts, among them entity purchase agreements, cross-sale agreements and trusteed arrangements. Partnership agreements funded with buyout insurance are an easy and farsighted way to secure your financial future.

Putting these basic plans in place is just one step you can take to protect your business. Creating a succession plan or an exit strategy takes time and work, but it can be worth it for most business owners. Planning ahead can prevent unnecessary losses, enable you to make informed choices and allow you to sleep at night knowing that you can exit the business on your own terms. r

Suzanna de Baca is the president of Private Capital Solutions Group. She is a registered representative and financial adviser for Park Avenue Securities LLC.