Next, consider appointing the potential employee/buyer an officer of the company or adding them to the board of directors or management team.
#SELL MY COMPANY HOW TO#
Related: How to Invest $1,000 and Grow It Into $1 Million This proving period could be for showing things like maintaining profit levels and production quotas, maintaining morale with key employees or simply showing leadership skills with good decisions when the owner steps back a little from operations. Consider signing an agreement that starts the process and then give them more important roles, not necessarily with extra compensation, but with the written promise that ownership will be transferred as they prove themselves. Make sure the employees who think they can buy the business can handle it once they have the reins. This is a typical provision and fair to the owner in order to protect the company, which is essentially the asset paying off the Note.Ī suggestion we make to business owners in this situation where the owner has already established a strong relationship with one or more employees is to take their time in the process with the transition of ownership and leadership.įirst, start with training and leadership. The owner will get regular reports regarding the financials, and if sales or profits start to go south, the owner can take back control of the company to rein things back in. Related: 10 Pieces of Financial Advice I Wish I Knew in My 20sįor example, in a situation where the employees are buying, there will typically be a Note, paid by the profits of the company and the stock of the company securing it. Thus, you may be able to get the price you want, set up a promissory note and have the security and collateral to come back in and take over the business if you have to for lack of payments by the employee/buyer. In fact, an employee may have an insight into the future value of the business and passion to carry it on. However, in those unique situations where you can approach one or more of your employees who want to buy your business or who have expressed an interest in doing so, you can often be in the driver's seat regarding price and terms. Employees tend to get a little concerned because they see a situation where they may not have a job if you can't find a buyer, and they tend to start looking for other employment. Third, it's generally not a good idea to start approaching your employees and telling them you're interested in selling. Second, an employee may not think the business is worth as much as you do because they're privy to the inner workings and dysfunctional aspects of the business.
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