6 Exit Strategies for Mid-Sized Business Owners: Find the Right Fit for Your Legacy

June 2, 2025

Exiting your business is more than a financial transaction—it’s a defining moment that impacts your future, your family, your employees, and your legacy. As a mid-sized business owner in the U.S., your exit strategy should align with your personal goals, the needs of your business, and the values you want to preserve.

With that in mind, here’s a brief overview of the six exit strategies to choose from when you sell your business.

1 | Sell to a Third Party (Merger or Acquisition)

A third-party buyer—such as a Strategic Buyer, Private Equity Group Competitor or Individual—purchases the business outright.

Best Suited To

Owners seeking maximum value, a strong buyer and clean exit.

The Pros

Often results in the highest sale price and maximum cash at closing for the seller.
Offers a clean break for the owner
May bring new growth opportunities for the business

The Cons

Complex negotiation and due diligence
Potential culture clash post-sale
Business disruption or layoffs may follow

Key Considerations

Are your financials and operations ready for due diligence?
Are you emotionally prepared for a full exit?
How will the transition affect your employees and customers?

2 | Sell to Employees through an ESOP

An Employee Stock Ownership Plan (ESOP) is a qualified retirement plan that enables employees in the U.S. to buy ownership in the business, typically through a trust funded by the company.

Best Suited To

Owners who want to reward loyal employees, maintain company culture and exit gradually. Moreover, an ESOP is ideal for profitable businesses with a strong management team and steady cash flow.

The Pros

Preserves company culture
Tax benefits for seller and the company
Motivates and retains employees

The Cons

Requires legal and financial complexity
Ongoing valuation and compliance costs
Not ideal for companies with unstable cash flow

Key Considerations

Does the business generate sufficient profit to fund the ESOP?
Is the management team strong enough to take over?
Are you prepared for the regulatory and fiduciary responsibilities?

3 | Family or Internal Transfer

The business is handed down to a family member or internal leader, often through gifting, a gradual sale, or a combination of both.

Best Suited To

Owners focused on legacy and continuity, particularly those with family members active in the business or a trusted internal successor.

The Pros

Preserves family legacy and business culture
Smooth transition with known successor
Potential for flexible financing over time

The Cons

Risk of family conflict or unqualified successor
May result in lower sale value
Complex estate and tax planning required

Key Considerations

Is your successor ready and willing to lead?
Will other family members be affected or involved?
Have you accounted for fairness in your estate plan?

4 | Management Buyout (MBO)

The existing management team purchases the business, often using a combination of personal funds, outside financing and/or seller financing.

Best Suited To

Owners with a skilled, committed leadership team that understands the business deeply and is motivated to continue its growth.

The Pros

Seamless transition—buyers know the business
Retains institutional knowledge and culture
May allow for phased involvement by seller

The Cons

Management may struggle to secure financing
Risk of leadership changes or internal conflict
Seller may need to assist with financing or guarantees

Key Considerations

Can the team raise capital or will you need to finance part of the sale?
Is the team ready to lead without your involvement?
Will staff and clients feel confident in the new leadership?

5 | Liquidation

The business ceases operations, and assets are sold to pay off liabilities. Remaining funds go to the owner.

Best Suited To

Owners of declining businesses or those without a successor or buyer, particularly asset-heavy companies where goodwill has diminished.

The Pros

Simple and quick exit
Converts assets into cash
No need to negotiate with a buyer

The Cons

Lowest return—no goodwill or future earnings captured
Job losses for employees
Ends business legacy entirely

Key Considerations

Will asset sales cover debts and obligations?
Are you prepared to walk away from the brand you built?
What are the tax consequences of asset sales?

6 | Gifting the Business to a Charity

A business owner donates all or part of the company to a nonprofit organization, often for philanthropic and/or tax-planning purposes.

Best Suited To

Owners driven by social impact who wish to leave a meaningful legacy and have no need for financial gain from the sale.

The Pros

Creates a lasting legacy
Potential tax deductions and estate planning advantages
Aligns business with social causes

The Cons

Complex legal and tax structuring
Not all charities can manage a business
Owner receives no financial compensation

Key Considerations

Is the charity equipped to run or liquidate the business?
Have you consulted a tax advisor or estate planner?
What’s the long-term impact of the donation on your financial plan?

The End Goal Defines Your Exit Strategy

There is no one-size-fits-all solution when it comes to exiting your business. Each strategy carries its own risks, rewards and responsibilities. The best exit is one that aligns with your goals—whether that’s maximizing value, preserving your legacy, or making a broader social impact.

The only rule of thumb here is to start planning early, consult with trusted M&A advisors, and think strategically about what comes next. After all, how you leave your business is just as important as how you built it.

Need help deciding on the best strategy to exit your mid-sized business? Our M&A experts are standing by to assist—book your free, zero-obligation appointment here.