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Exit Strategy Advisory

What is the 2-year rule for selling shares in Georgia?

According to the Tax Code, surplus income received by a natural person from the sale of an asset (shares) owned for more than 2 years is exempt from income tax.

Is it better to sell assets or shares?

Buyers often prefer buying assets to avoid hidden liabilities, while sellers prefer selling shares for tax benefits and a cleaner break. The choice depends on negotiation and tax advice.

Can I stay in the company after selling it?

Yes, many buyers require the founder to stay for a transition period (6-24 months) to ensure smooth operations, often tied to an earn-out mechanism.

Do I need a valuation report?

While not legally mandatory for private sales, a professional valuation report is crucial for negotiating a fair price and justifying the value to investors.

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Exit Strategy Advisory: Planning for Successful Business Conclusion

For any successful entrepreneur or investor, there comes a time when they must leave the company, monetize their investment, or pass the business on to heirs. Exiting a business is as important and complex a process as starting one. Exit Strategy Advisory involves planning in advance how, when, and under what conditions a founder will leave the company to maximize financial gain and minimize risks. This could involve a company sale (M&A), an IPO, a Management Buyout (MBO), or liquidation. In Georgia, where the corporate market is developing rapidly, planning the right exit is crucial for optimizing tax liabilities and avoiding legal disputes.

Legal.ge offers access to corporate lawyers and business consultants who will help you develop an exit strategy tailored to your goals. Specialists on our platform ensure that your years of hard work are duly valued and the transaction proceeds smoothly.

What Does Exit Strategy Advisory Cover?

The service covers all stages of strategic planning and execution:

  • Analysis of Exit Options: Evaluating which path is best for the specific business — selling to a strategic investor, attracting Private Equity, or transferring to family members.
  • Vendor Due Diligence: Checking the legal and financial "health" of the company before the sale to eliminate flaws that could reduce the company's value.
  • Structuring and Tax Optimization: Planning the transaction to minimize tax liabilities within legal limits (e.g., Asset Deal vs. Share Deal).
  • Succession Planning: In the case of family businesses, developing a management transfer plan.
  • Negotiations: Communicating with potential buyers and agreeing on contract terms.

Common Scenarios When You Need This Service

An exit strategy is relevant at various stages:

  • Serial Entrepreneurship: When a founder wants to sell an existing startup (Cash out) to invest capital in a new idea.
  • Retirement: A business owner wants to cease active involvement and securely realize assets.
  • Disagreement Among Partners: When one partner wants to leave the company while the others continue operations.
  • Market Peak: When the industry is at the peak of growth and it is the best time to sell at a high price.

Georgian Legal Framework

Knowledge of the Tax Code of Georgia is vital when planning an exit strategy. For example, when selling shares held for more than 2 years, an individual may be exempt from income tax (under certain conditions). Regarding corporate transactions, the Law on Entrepreneurs applies, regulating procedures for mergers, divisions, and liquidation. If the exit involves selling the company, it is also necessary to consider the Law on Competition to determine if a notification of concentration to the Competition Agency is required.

Service Process Stages

Working with a specialist includes the following steps:

  1. Defining Goals: Clarifying the client's financial and personal goals (quick exit vs. phased transition).
  2. Preparation: Organizing company documentation and preparing the "Sales Story."
  3. Valuation: Determining the real value of the company.
  4. Structuring: Creating the legal model of the deal (SPA, Asset Deal).
  5. Closing: Finalizing the transaction and ensuring receipt of funds.

Why Legal.ge?

Exiting a business is often the largest financial transaction in a person's life. Even a single mistake can mean millions of Lari in losses. Legal.ge connects you with experienced advisors who understand both legal nuances and the language of business. They will help you plan your exit to get the maximum benefit from your labor. Start planning your strategy today on Legal.ge.

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