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Sell to partners or your employees
Selling your business to your partners or management can be an attractive option to consider. Current employees know the business and have a vested interest in seeing it prosper. As well, customers, suppliers and investors may be reassured by the stability this option offers.
Advantages
- The management team knows the business environment, its customers and the industry
- The sale transition time may be compressed as the management team already understands the core business
- By selling to management, you avoid a steady stream of potential third-party buyers touring the facilities and reviewing records
- There will be little disruption to the day-to-day operations
- Confidential information is not released
- Management may become more concerned with profitability
Some Questions To Consider
- Which employees or business partners would be best suited to purchasing your interests?
- Do the purchasers have access to sufficient funds to buy you out entirely or will you have to finance part of the purchase price?
- Do employees have the vision and management capability to assume an ownership role through the transition period and run the business profitably long term?
- Is your management team prepared to assume the risk of ownership?
- Can the business take on additional debt to support the management in financing the acquisition?
- If you have to finance part or the entire purchase price, can the purchaser profitably run the business to ensure your repayment?
- Will the purchase price be paid from future profits or employees’ own capital?
- Are employees able to provide personal indemnities and assume successor obligations?
A Management Team Can Help
Working closely with your management team to develop a transition plan will help ensure a smooth exit and minimize disruption to business operations and employee performance.
If your company does not have a management team positioned to take over the company, consider bringing in a new partner or an outside senior executive who can eventually buy your interests. Over time, you would be able to turn over control and transition the business ownership gradually.
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