This site is part of the Global Exhibitions Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.


An Overview of Self-Storage Exit Strategies: Careful Planning for Leaving a Business

John E. Barry Comments

Self-storage has been and should continue to be a wonderful cash-flow investment. After all, that’s exactly what the business was founded upon: a pure investment real estate that provides steady income.

Economic expansion over the past 10 years produced a doubling in the size of the self-storage industry due to strong consumer spending, attractive interest rate, and generous, available financing. What resulted was not just cash flow but property-value appreciation, something that was not necessarily an initial goal, but a nice surprise.

The business is comprised largely of individual owners who took a chance on a new venture in hopes of reaching their financial goals. But few thought about how they’ll exit the business—and on what terms. Just as starting a successful business requires planning, hard work and a little luck, so does leaving it. Here are some common methods self-storage owners can use when the day comes. 

Estate Planning

Estate planning should involve your attorney and accountant and can range from simple to complex depending on the size of your balance sheet. In any case, wills, trusts, life insurance and family partnerships should be a part of your plan to distribute assets, reduce your tax liabilities and provide for a succession plan.

The succession plan should cover a multitude of life occurrences, such as what happens upon your death, disability, divorce, retirement or partnership split. This should include how the property is passed to your heirs, how it will be valued, and how it will be managed. 

Buy/Sell Agreements

All partnership arrangements should contain buy/sell agreements. At the outset of a partnership, these agreements are crucial to a successful investment experience with others. They should address partners’ rights, capital contributions, distributions of profit and losses, management, transfers of interest, withdrawal of partners, valuation, and dissolution.

The key is to understand how the business is valued and have this done annually. This way you always know what your investment is worth and can manage this asset like you would your other investments, annually re-evaluating your goals, progress and time horizon.

« Previous123Next »
comments powered by Disqus