Business Ownership Transfer or Sale
Many business owners do not realize the complexity and details involved in a third party sale until they are well into negotiations. You need to
identify the appropriate steps before you put your business on the market, so the sale process can be as organized and as efficient as possible. In doing so, you can reduce stress on both you and your business while maximizing the likelihood that the transaction will achieve your goals.
In this issue you'll find an outline of the primary reasons owners choose to exit via sales to third parties. Before you consider that option, you and your company must be prepared for the sale and the M&A market should be favorable. Creating a written plan that minimizes taxes, allows you to focus on company profitability, and holds your advisers accountable for achieving your goals is key to the successful third party sale.
As Baby Boomers age and retire, an ever increasing number of businesses will become available for sale. Those that are prepared tend to fare better than those who fly by the seat of their pants when it comes time to sell. This article illuminates three aspects of the intersection between Exit Planning and third party sale transactions in order to help business owners prepare for a sale transaction well in advance
This issue tackles three misconceptions many owners hold about sales to third parties: 1) Sales to third parties are less risky than transfers to insiders; 2) Buyers will appear when an owner is ready to sell; and 3) There’s no risk in waiting for a third party to appear.
This issue is perfect for owners who object to Exit Planning because they believe they can’t sell their companies today or anytime soon. A case study describes an owner who realized—only after being approached and rejected by a buyer—that his failure to create a management team and growth plan, to install comprehensive systems, and to increase cash flow left him little to sell. This article encourages owners to start working now to make their businesses attractive to buyers.
To successfully transfer your ownership interest to insiders, such as family members, co-owners or key employees, you must:
Preparation for the sale of a business to a third party buyer and the completion of the transaction itself require focus, planning and stamina.
- Achieve your objectives related to value and timing;
- Minimize your risk and;
- Keep you in control of the company until you have received full payment for the company.
To accomplish this, you may use individual or company performance criteria for ownership transfers, business cash flow for the primary source of funding for transfers and/or create plans that unfold over a number of years.
Today we discuss 10 elements that make insider transfers successful and keep the owner in control until he or she is paid the sale price. These are important issues to consider if your desired successors do not have the funds to cash you out.
A case study illustrates the clash between an owner’s desire to sell to employees and the employees’ lack of cash. This issue lists the three goals of any good transfer-to-employees plan, an explanation of the two-stage plan design and the four employee transfer requirements: business value, time, a cooperative bank and strong management team.
Transferring your business to insiders (family members or key managers) is not without risk, but those risks can be minimized given ample time to do careful planning and to build business value. This issue addresses the three biggest owner risks and outlines ways to minimize each.
This case-study-based issue examines important considerations for any owner thinking about transferring ownership interest to a child active in the business. We examine the issues of Equal vs. Fair, the value of using experienced, unbiased advisors, and offer a framework owners can use to make their own decisions.