Most owners have four realistic routes out of a private business. Each solves a different problem, and each has a cost the others don't. This guide compares them without a thumb on the scale.
The four routes
Trade sale
Selling to another company — usually a competitor, customer or consolidator. Typically the highest headline price, because a strategic buyer pays for synergies as well as earnings. The costs: a long and intrusive sale process, confidentiality risk if it collapses, and no say in what the buyer does afterwards — with the business, the brand or the people. Earn-outs frequently tie the seller in anyway, at the buyer's pleasure.
Management buyout
Selling to your senior team, usually backed by private equity or debt. Keeps the business independent, at least initially, and rewards the people who helped build it. The costs: managers must personally borrow or invest, which many cannot or will not; PE backing means the business is resold within a fund cycle; and the negotiation puts you across the table from your own team.
Family succession
Passing the business to the next generation. Emotionally natural, and sometimes exactly right. It works when the successor genuinely wants the business and is genuinely suited to running it. Where either is missing — which is often — the result burdens the child and endangers the company. It also usually pays the exiting generation the least.
Employee ownership
Selling a controlling interest to an Employee Ownership Trust for the benefit of all employees. Market value, paid partly up front and partly from future profits; no external buyer to find; capital gains tax at an effective blended rate of 12% on a qualifying sale — half the standard rate; and the business remains independent indefinitely. The costs: payment takes years, the price is market value rather than a strategic premium, and the structure demands genuine leadership succession and decent governance to work.
Side by side
| Trade sale | MBO | Family | EOT | |
|---|---|---|---|---|
| Headline price | Highest, potentially | Market value, negotiated hard | Often discounted | Market value, independently assessed |
| Cash on day one | Most of it, usually | Depends on funding | Often little | Part; balance over years |
| Seller's tax | CGT, with reliefs shrinking | CGT | Varies; can be complex | 12% blended rate on a qualifying sale |
| Business stays independent | No | For a while | Yes | Yes, by design |
| Certainty of process | Low until signed | Medium | High | High — no buyer to find |
| Impact on employees | Unknown, often adverse | Neutral to positive | Neutral | Positive, structurally |
| Owner's exit pace | Fast, or earn-out | Negotiated | Flexible | Gradual, flexible |
How to choose
Notice that the table has no "best" column. The right route follows from what you are actually optimising for:
- If it is maximum price, whatever follows — run a trade sale process, with your eyes open about the experience.
- If it is rewarding a capable senior team that wants to own the business personally — explore an MBO, and stress-test the funding early.
- If it is a genuine family successor — take succession planning advice well before you need it; time is the asset there.
- If it is the business continuing as itself, a fair price paid dependably, and your people sharing in what they build — employee ownership was designed for exactly this.
The routes can also combine: founders retain minority stakes alongside EOTs; family members lead employee-owned firms; partial trade sales fund EOT deposits. The structures are more flexible than the labels suggest.
We advise on employee ownership exclusively, and it is still not what we recommend to everyone. If your situation points to a trade sale or an MBO, we will tell you at the first conversation. Have that conversation.