Would You Like to Sell Your Business to a Family Member or Key Employee without Acting as “The Bank”?
We recently assisted a business owner who was ready to retire. We discussed the possibility of selling to an outside buyer, but he really wanted to sell the business to his general manager who had been a loyal employee for many years. The biggest challenge was that the general manager did not have the capital required to buy the business in the traditional way (not unusual in an employee purchase).
Brady Ware Capital represented the owner in negotiating a fair purchase price with the general manager and then introduced him to several bankers who specialize in these types of transactions. The bank was able to put together a creative financing package that included a small Seller Note and SBA financing, which enabled the general manager to successfully complete the transaction. The transition has gone very well, and both parties are extremely happy with the results.
Transactions like this are becoming more and more common.
Many business owners would like to sell their business to a family member, a key employee, or even their entire employee group (ESOP). While this often sounds like an attractive succession plan for the business owner, most do not know where to start.
It’s important to understand some of the challenges that go along with this type of transaction. One of the biggest challenges is often that the Buyer does not have the capital to buy the business and often looks to the Seller to act as “the bank.”
The Brady Ware Capital team has assisted numerous business owners in analyzing, choosing, and executing a plan that will work for everyone involved. Some of the key issues that we can help address include:
- What would the business owner like to accomplish with the transaction from a financial, lifestyle, and family perspective?
- How much is the business worth?
- Determine if the potential buyer(s) has the capital to successfully complete the transaction.
- How to approach the potential buyer regarding the transaction.
- Work with a bank to finance the transaction.
- Identify the business owner’s ongoing role (and compensation) in the business after the transaction is completed.
If you are considering the sale of your business, we are ready to help you explore your options.
Brady Ware Capital Team