Many business owners would prefer to see their business go to someone they know, such as key employees, partners, or family members in order to ensure that their legacy continues. Others may want to sell to an outsider. But given the dismal 20% to 25% average success rate of selling privately held businesses to outside buyers, many owners may not have that option. They will be forced to sell to an insider in order to liquidate or “cash in” on some of their wealth in order to fund the rest of their lives. An internal transfer or sale may provide a better option for owners to achieve their financial and non-financial long-term goals.
There are many benefits of selling your business internally that should not be overlooked:
- Insiders already know the business, which means less disruption and a smoother transition.
- Owners can negotiate a level of involvement that fits with their own personal goals.
- Internal sales may be structured in a more tax-efficient manner that minimizes owner risk and keeps more of the proceeds in the seller’s pocket.
- Loyal partners, employees, or family members are more likely to carry on the seller’s legacy than outside buyers would.
However, selling to an insider is not as simple as it might sound due to a number of factors, including but not limited to, the complexity of family business dynamics and challenges of securing financing to fund the transfer. Selling your business to an insider is definitely a process, not an event, even if you are selling to family members or an existing partner.
Owners will need to:
- Prepare themselves for life beyond the company.
- Calculate how much money they need from the sale.
- Determine what their business is worth and whether they will need to grow it before they can transition the ownership to others.
- Identify and groom a successor, which can take significant time.
There are a lot of moving parts to planning an internal ownership transition. An independent and objective advisor, who is trained in ownership transition planning, can guide you through the process and help you to understand all the decisions that will need to be made. Most owners will run only one business in their lifetime, and that business is their ticket to financial independence, which is why it is imperative that owners give themselves enough time and get the proper support to prepare for an internal transfer.
Attend Our Free, Webinar to Learn How You Can Sell to an Insider and Get What you Deserve
Secure your future today and register for our exclusive business owner webinar: How to Sell to an Insider and Get What you Deserve on January 21 at 1 pm EST. Click here to register.
You owe it to yourself and your company to attend this one-hour educational webinar and learn about the transfer options available to you.
Many business owners would prefer to see their businesses go to someone they know but they are not sure how to accomplish it. If you’re thinking about selling to an insider, whether it’s a family member or key manager, and are not sure financially how to achieve such a transfer, Business Transition Academy can help!
During this webinar, we will cover key steps for planning a successful internal transfer, the important decisions that you will need to make, possible transaction structures and their pros and cons, how to minimize taxes, and more. Knowledge is power. Take advantage of all the FREE education we offer at Business Transition Academy and learn why it is critical to prepare you and your company for an eventual transition. Whether you wish to sell your company in 3 years, 5 years or not at all, utilize our resources to take control of your future in 2016.
As a thank you for attending this webinar, you will receive a link to download Bruce Raymond Wright’s new book, not yet in print; Transcendent Thought and Market Leadership 1.0 and a link to our eBook, Cashing Out of Your Business -- Your Last Great Deal, which is a must read for all business owners.
You can download our free guide to help you prepare for a successful internal ownership transition: How to Sell Your Business Internally: http://bit.ly/1SOGX7G.