Thinking About Transferring Your Company To Insiders
Business owners decide to sell their businesses to insiders (co-owners, a key employee, or group of key employees (KEG-Key Employee Group) for many different reasons. Rightly or wrongly, some believe that their companies aren't attractive to outside third parties. Others make this choice because they want to "reward" longtime employees with business ownership or want to give Key Employees the same shot at financial security they had. Still others have already made vague promises of ownership or believe the only way to continue their legacy is to transfer to key employees. Another group believes that a gradual sale to Key Employees will motivate those employees to increase the value of the company. Whatever the reason, we suggest that before you choose this exit path, you consider the subjects raised in this, and the next, issue of The Exit Planning Navigator® newsletter.
Learn About The Transfer To Insiders
Proper planning begins with knowing what to do. You can read The Completely Revised How To Run Your Business So You Can Leave It In Style, (especially Chapters Four and Seven), attend workshops and seminars on the topic, and meet with your advisors, especially the person who sent you this e-newsletter.
Test Your Assumptions
In addition to desire, do your key employees have the ability to run the business without you? Good, even great, management and key employees do not equate to good, even passable, successor ownership.
Don't be surprised if one or more of your Key Employees declines to buy stock even under the most favorable terms. It is difficult, if not impossible to know what fires burn within your key employee group until you present them with a concrete proposal.
No More Promises
Consider Age Of KEG Members
In the next issue of this newsletter, we'll finish this discussion of subjects you need to think about before you decide to make the transfer to insiders. If you have any questions, or want more information, about insider transfers, the advisor who sent you this newsletter is experienced in Exit Planning and can help you.
Subsequent issues of The Exit Planning Navigator® discuss all aspects of Exit Planning.