When other options are limited, liquidation [1] of the business may be the only viable route to equity monetization.[2]
Here are two situations where liquidation was the right answer:
- A large used car dealership – The owners had found it increasingly difficult to make a profit in the used car trade. The business, however, operated from a very desirable location. After receiving a large unsolicited offer for the land from a real estate developer, the owners concluded that an orderly liquidation of the business and sale of the land was the best means for monetizing their equity.
- A manufacturer’s rep agency – Two partners came to a parting of the ways after having generated a large volume of capital equipment orders for future delivery. Neither, however, wished to sell his interest to the other nor were they even on speaking terms. A trusted third party was hired to oversee the winding down of the partnership’s affairs and distribute the liquidation proceeds.
If the first rule of successful investing is “don’t lose
money,” then the first rule of equity
monetization is “don’t let it get away from you once you’ve made it.”
[1] This is the sixth article in a series illustrating various ways to “monetize your equity.”
[2] This article is intended for informational purposes only and does not represent tax, accounting or other professional advice. Please consult your own professional advisors before taking action based on the information presented herein.
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