Maximize Value by Selling to Those who
Know the Business Best
How To Sell To My Partners Or Employees?
Selling to your partner(s) or employees can be a highly-profitable and viable exit strategy. Since partners and employees work in the business daily, they understand the value proposition of the business much better than non-insiders. Partner buyouts are the easiest transactions to finance, assuming the buying partner acquires 100% of the company. The buyer can often initiate the transaction for no money-down, based on the equity currently held in the business.
Many business owners feel that the best prospect for their business will be within the employee ranks. This can be a viable, positive method of exiting while also rewarding loyal employees with ownership. It is normal to think that employees would be a natural choice, but there is a saying about people in business: “There are leaders and there are followers and very few followers ever become leaders.” After an employee and his spouse discover the reality of the down payment, the monthly debt payments, and the overall responsibilities involved in ownership, the employee usually remains an employee; however, this is still an excellent avenue to pursue especially if you have a management team in place.
Partner buyouts are the most easily financeable transactions of all, assuming the buying partner acquires 100% of the outstanding shares of the company. The buyer can often initiate the transaction for little to no money-down, based on the equity currently held in the business
Functions of the TVG
- Consultation with seller to learn more about the goals of the Seller.
- Provide an independent business valuation
- Development of marketing plan and marketing package (if applicable)
- Assistance in determining asking price and deal structure
- Coordinate and facilitate all buyer / seller meetings
- Additional consultations with buyer / seller
- Assisting buyer (if applicable) with preparation of offer to purchase or letter of intent and presentation to seller
- Act as a buffer between buyer / seller during negotiations
- Offer follow-up with buyer / seller
- Meetings with buyer / seller to coordinate buyer due diligence
- Consultations with buyer / seller and outside advisors
- Assist buyer in obtaining financing (if applicable)
- Coordination of closing and other documentation with attorneys
- Consultation with parties regarding transfer of licenses, utilities, etc.
- Assist with and coordinate the closing and subsequent transfer of the business
Though fees vary on the size of the transaction, on all transactions there is a preparation fee and a success fee at closing.