When thinking about ways to sell your business, you are likely familiar with the most common strategies proposed by business advisors: selling to a third-party such as a private equity firm or a competitor, or selling to your family. What your business transition advisor may not have discussed with you is instead selling your business to an Employee Stock Ownership Plan (an “ESOP”).
For the business owner who desires a great outcome, including the business owner’s family in the exit planning process, as well as the decision to sell, is vital.
If you own a business and decide to sell, you would hope that sale becomes your big exit. You know what I mean. The exit that allows you to hire a driver, gardener, and of course, someone like Alice from the Brady Bunch (side note: Don’t feel bad if you like that show. I’d still watch it every single day if I could!). Before you begin using hundred-dollar bills to light your cigars, let’s talk about three very important facts you need to know as you prepare your SBA business for sale.
Anyone who owns a family business is intimately familiar with the blood, sweat, and tears associated with building and then keeping the business viable. Nevertheless, it is not unusual for the business entrepreneur to postpone consideration of various issues involved in transferring the business to the next generation, including determining the value of the business.
For every entrepreneur, a smooth transition of business ownership will be of importance at some future point. The Buy Sell Agreement deals with a specific exit strategy case. An agreement by and between business owners, it establishes a mechanism for the purchase of ownership interests following the departure of an owner due to a triggering event (i.e., death, divorce, disability, retirement, etc.).