Selling to Family Members or Employees? Ask Question #1

If you are contemplating selling to the next generation or to key employees as part of an Exit Strategy, Question #1 is:

Do you need money from the sale to fund your retirement?

If your retirement needs are already met, you can afford to be more benevolent or take more risks with the structure of the sale. If a sizable portion of your retirement monies depends on a liquidity event from the sale of your business, then certain steps need to be taken.

After a business valuation, an SBA backed loan can be utilized for borrowing up to $2 million. For larger transactions, there is a universe of Asset Based Lenders and Private Equity Groups. However, your company’s financial reporting and profile of the buyer(s) have to be managed and presented correctly to the right lender. You only get one chance at a good first impression.

We get calls all the time from frustrated sellers who’s a family member or employees have been trying to buy their business for 6 months and they need help. Sadly, confidentiality has probably been breached and the lender’s appetite for the loan has soured because it was poorly packaged and served up. Also, your current bank might be the wrong source for a business acquisition loan.

We typically have 2-4 generational or key employee transfer engagements at any point in time. This is very satisfying work as it gives us great pleasure in helping the next generation/key employees take the reins and grow their own business and wealth. Visit us at for more information.

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