While we could compare each exit strategy with many different criteria, lets use these 4 key considerations to provide some insight on the effects each exit strategy might produce.

When considering a family transition, the social factors can be maintained as normal, while key leaders stay in place and the family legacy is passed on to the next generation. The level of control over the process also remains relatively high as the transitioning owner can play a role in setting the terms of the transition, or entry requirements into ownership. Where the family transition often differs from an MBO or Sale is in the financial return. By keeping the business in the family, a trade-off may need to be made between a potential financial gain for the benefit of the family or future generations.

In comparison, a management or shareholder buyout presents more of a middle ground between a family transition and an external sale. The family legacy remains relatively intact by continuing the same activities, often under the same name for a certain period of time. Unless there is a major upheaval of employees in the new owners plans, the social aspects of the business can also remain consistent and business can continue as normal. The transitioning owner may have slightly less control in this strategy, but will possibly have more to gain financially compared to a family transition, as they must negotiate with the Management or Shareholders wishing to purchase the ownership, but not necessarily at the full price tag as an external buyer would be faced with.

Finally with an external sale or merger, there is a potential trade-off to expect with social considerations, which may be impacted by the decision of the new owners. From a legacy perspective, it may not continue in the same form as it did when the family owned the business but, as we often see, a redeployment of capital into other, new ventures can mean a renewal of the family legacy. Again here, the control is somewhat limited for the transitioning owner as they are usually reliant on getting fair market value for their business. Through this, generally, the transitioning owner does stand to gain most financially from an external sale as they will be exchanging their full ownership and business for an agreed upon price.