Tuesday, September 27, 2011

Do You Have a Built In Buyer for Your Business?

I have coincidentally fielded three phone calls from clients in the past week, discussing the possibilities around selling their business to an existing employee. This can be a really good idea, provided the employee is prepared to pay fair market value for the business, and you are prepared to, perhaps, take payment over time. Often, a structured buy in can be negotiated, where the employee purchases a percentage of your shares of your business each year, slowly taking over the business. Of course, there are many issues to be considered. Even minority shareholders have rights, so you will want to be sure you have a shareholders agreement in place which sets out the rights and obligations of the shareholders, and clarifies roles. You will also have to consider how you might get the shares back if the employee, for instance, buys 10 percent of your business and then leaves or is terminated. But the employee likely knows your business and may make the perfect buyer if you can negotiate mutually agreeable terms. It's worth a look inward to see if the buyer of your business may actually be sitting in the office next door. Thinking ahead and planning your exit strategy makes good business sense.

4 comments:

FrancisR said...

having an employee as a buyer is probably a good idea. In my opinion, establishing a good business relationship with your would-be-buyer employee would ease the process of agreeing on terms. Since you know the person, you can easily judge if the deal will work or not

http://dglaw.org/

joe said...
This comment has been removed by the author.
Matthew Engquist said...

I agree. It will be a good move for an outgoing owner to sell his business to an existing employee, provided that the latter would be able to meet the financial considerations of the company. Since the potential owner already knows how the business runs as a whole, it will be easier for the transition to take place seamlessly.


Matthew Engquist

Mark Martin said...

The very core and essence of a company is to be viewed by all customers as the first and only choice. The easiest way to achieve that goal is to ensure that every customer experience results in a very satisfied loyal, frequent user customer who recommends your business to their friends and neighbors. It’s no secret that there’s a huge buzz for our Toppers brand pizza in Ontario, and we’re not shy about the fact that we’re now offering franchise opportunities there,either. Specifically, we’re initially targeting the Toronto and Ottawa markets – since there are way too many colleges and universities there to count – and guess who eats a lot of our product? Oh yeah – college and university students. Lots of them. business for sale in Ontario