<\/p>\n
Some business owners \u2014 particularly those who founded their companies \u2014 may find it hard to give up control to a successor. Maybe you just can\u2019t identify the right person internally to fill your shoes. While retirement isn\u2019t in your immediate future, you know you must eventually step down.<\/p>\n
One potential solution is to find an outside buyer for your company and undertake a long-term deal to gradually cede control to them. Going this route can enable a transition to proceed at a more manageable pace.<\/p>\n
Time and capital<\/p>\n
For privately held businesses, long-term deals typically begin with the business owner selling a minority stake to a potential buyer. This initiates a tryout period to assess the two companies\u2019 compatibility. The parties may sign an agreement in which the minority stakeholder has the option to offer a takeover bid after a specified period.<\/p>\n
Beyond clearing a path for your succession plan, the deal also may provide needed capital. You can use the cash infusion from selling a minority stake to fund improvements such as:<\/p>\n
\u2022 Hiring additional staff,
\n\u2022 Paying down debt,
\n\u2022 Conducting research and development, or
\n\u2022 Expanding your facilities.<\/p>\n
Any or all of these things can help grow your company\u2019s market share and improve profitability. In turn, you\u2019ll feel more comfortable in retirement knowing your business is doing well and in good hands.<\/p>\n
Benefits for the buyer<\/p>\n
You may be wondering what\u2019s in it for the buyer. A minority-stake purchase requires less cash than a full acquisition, helping buyers avoid finding outside deal financing. It\u2019s also less risky than a full purchase. Buyers can, for example, push for the company to achieve certain performance objectives before committing to buying it.<\/p>\n
Integration may also be easier because buyers have time to coordinate with sellers to implement changes \u2014 an advantage when their IT, accounting or other major systems are dissimilar. In addition, in a typical M&A transaction, decisions must be made quickly. But under a long-term deal, the parties can debate and negotiate options, which may improve the arrangement for everyone.<\/p>\n
What\u2019s right for you<\/p>\n
There are, of course, a wide variety of other strategies for creating and executing a succession plan. But if you\u2019re leaning toward finding a buyer and are in no rush to complete a sale, a long-term deal might be for you. Our firm can provide further information.<\/p>\n
\u00a92018<\/p>\n","protected":false},"excerpt":{"rendered":"
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