One of Brinen & Associates’ many specialties is advising owners about when they want to buy or sell a small business. On the sell-side, some sellers have particular buyers in mind: Their key employees.
Sellers often want the business to live on via the people who helped build or maintain its success. My feeling is that no matter how high or low your business is valued, selling to your long-term workers is a solid bet. They wouldn’t just be “buying you out” – they’d be purchasing your name and furthering your vision.
There are additional reasons for wanting to sell a business to one or several key employees:
- Personal Financial Stability. An owner with enough in the bank or who may be ready to retire would certainly consider employees’ as successors. This is the ultimate sign of success – making enough money to let you choose your buyer.
- There’s Ample Time. The exit is inevitable but there’s no rush, so you can groom the successors for the throne. One example is on “Modern Family”: Claire is now CEO of Pritchett’s Closets & Blinds while her father, Jay, is still the owner and kept on as a consultant. (The pressure’s off – note how Jay dresses and acts a lot more casually at his business in the current season.) This is a nepotism-optional route to consider. Your presence can also ensure that payments are made over the months or years of the transition.
There are other reasons to pursue a management buyout. It can be quicker and safer and especially resourceful if the business’ value is so low that outside buyers would likely collectively pass.
The Lawyer’s Role
Whether we were with you from the beginning, or you need us to draft an overdue exit plan, buy-sell agreement, and the estate planning that accompanies the plan, Brinen & Associates can help you successfully sell your business.
As your counsel, it would be our job to set your exit objectives, determine the value of the business, protect and promote its value, and ultimately transfer the business to its employees-turned-buyers. Simply put, those with the staying power, loyalty and experience are the best choices. We’ve been through many of these buyouts and you can use us as a resource to identify the key employees who’d make great successors.
Transferring ownership to your key employees is a sensible way to ensure that your business will be in good hands while also maximizing your price point. Contact us to discuss the best options when considering a sale.