Selling your business to partners or employees

In some cases, the potential buyers of your in the business may come from the inside. If there are partners in the ownership, one partner seeking to sell may try to come to an agreement with other partners in executing a sale.

“The big question when selling to a partner is to what extent the partners are on the same page,” says Smith. He has seen situations where partners who mostly agree on how to operate a business have significant differences when it comes to terms of a sale. Good communication that leads to alignment on priorities is important to help facilitate a smooth transition.

Some business owners want to create an opportunity for employee ownership of the firm as part of their business exit strategy. One alternative is an Employee Stock Option (ESOP), which is a trust and is incorporated into a retirement plan for an organization. It offers tax advantages for the seller and for the ESOP as ultimate owner of the company.

Employees who participate in an ESOP will be vested in the plan after a specific number of years, which encourages them to remain with the business over the long run. A business loan can be a great vehicle for a partner to buy your business, too.

Keeping it in the family

Some business owners wish to pass down their business to their children, other family members or even gift it to employees who will continue their legacy. This option typically is considered if the recipient plays a key role in the business. You’ll need to decide if any money will change hands or if you will pass the business and all of its assets to your successor. Both situations can have financial implications for both you and the individual or individuals taking over your business.

Identify successors: Look for family members or employees who have the skills, experience, and motivation to take over the business. Consider their strengths, weaknesses, and interests, and involve them in the decision-making process. 

Develop a plan: Create a detailed plan that outlines the steps you'll take to transition the business. This plan should include a timeline, financial projections, and contingency plans for unexpected events. Create a detailed plan that outlines the steps you'll take to transition the business. This plan should include a timeline, financial projections, and contingency plans for unexpected events. If you foresee a need for funds, business lending could be an option to consider. Communicate openly: Communication is critical during a business transition. Be honest with your potential successors about your expectations and plans and encourage them to share their concerns and ideas. Keep all stakeholders, including employees and customers, informed about the transition. 

Train and mentor your successors: Provide your successors with the training and mentoring they need to succeed in their roles. This may include on-the-job training, formal education, or mentoring from outside experts. 

Develop a transition team: Create a team of advisors, including lawyers, accountants, and financial advisors, to help you with the transition process.

Walking away

There’s a song about knowing when to walk away. Maybe this resonates with you. Just because you’re ready to hang up your hat doesn’t mean you have to transition your business to someone else. You can simply turn out the lights and close the door. Well, there’s a bit more to it than that. Here’s what you need to think about:

• Real estate: Do you own real estate? If so, you’ll need a plan for selling it. It can take time to sell commercial property, so it’s a good idea to get ahead of it. If you rent, review your lease to make sure you meet your contractual obligations.


• Business asset: From inventory to store fixtures, you’ll want to make a plan for liquidating assets.


• Legal stuff: If you’re required to file business tax returns, you will need to notify the proper authorities that your business has closed.