Selling to Partner or Employees
Your business partners - even minority owners or silent partners-may want to buy you out. One or more key employees may also be interested. Questions to ask include:
- Which employees or business partner(s) should buy your interests?
- Can he or she raise the money to completely buy you out or will you have to finance part of the purchase price?
- If you have to finance the purchase price, can the purchaser run the business well enough that your payments will be secure?
- Who is to be part of the employee-owner group?
- Do employees have the skill and financial resources to complete a purchase?
- Will the purchase be through future profits or employee capital?
- Are employees able to provide personal indemnities and assume successor obligations?
For some owners, selling the business to all employees through an Employee Share Ownership Plan may be the best option. Permitted in many provinces, the ESOP lets an owner sell a majority or minority interest in the form of independently valued shares while maintaining control of the company.
If there's no one aboard who can buy out your interests, plan in advance to bring in a new investor to eventually buy your interests.