Common strategies for selling a business involve listing with a business broker, talking to competitors who might want to expand, and posting for sale by owner ads. All of these can be successful, but before a business owner who is ready to retire actually begins the selling process, it’s a good idea to know all of the options. They include three approaches not usually considered.
1. ESOP: The business owner with several employees and a few years to plan head before selling might consider the idea of developing an Employee Stock Option Program. Usually set up by an attorney and administered by a bank, an ESOP enables the employees to have some of their wages and salaries set aside into a fund that will be used to buy out the out the owner at a specified date in the future--usually five years or more. Among the advantages is that the seller doesn’t worry about having to market the company, the buyers are knowledgeable about the business, and there’s no question about how to raise the money for the purchase. As they will own the company one day, employees in this arrangement should be counseled to agree on the rights and responsibilities in the newly-purchased business long before it actually changes hands.
2. All in the family: The tradition of a retiring owner turning the company over to children, grandchildren, or nieces and nephews is barely practiced anymore, as those in the younger generation rarely have an interest in their “family’s business.” Until recently. It now appears to be gaining popularity as a method for selling a business, as those currently trying to join the labor force are finding that good jobs are not as easy to get as they were just a few years ago. The solution might be for one or more family members to buy out an older relative and take over a business. In some cases, it’s not a good idea to mix business into family relations. The result can be harmful to connections between relatives. But if all of the details of the deal are spelled out in a contract, and the parties agree beforehand not to let business problems interfere with familial relationships (sometimes easier said than done), keeping the enterprise in the family might be a good way to solve the father’s desire to sell, and the need of the children to find work.
3. Outplacement organization: The job of helping laid off employees find new work is often assigned to outplacement companies or outplacement departments in companies that are terminating some of their employees. And although the focus is usually on matching those in the job market with openings in other organizations, there’s no reason that the more enterprising of the people seeking employment can’t be introduced to promising business opportunities. This plan for selling a business with help from an outplacement office involves providing a packet of information about the business and terms of the sale to those who counsel newly-unemployed. No, self-employment isn’t for everyone, but it is an option for those looking for a job. And outplacement professionals can be a good resource of potential buyers.
About The Author: Peter Siegel, MBA is the Founder and President of BizBen.com. Mr Siegel has provided assistance since 1994 to business owners, business brokers and agents on how to sell small businesses in the California marketplace via the BizBen Network of business buyers. He can be reached directly at 925-785-3118 to discuss the best strategies for selling California small businesses.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area
Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.
|Joe Sandbank, Esq. - Legal Services
I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.
|Helen Yoo: Escrow & Bulk Sale Services - Southern California
New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
|Elizabeth McGovern: Escrow Services - SF Bay Area
McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.
|Brad Steinberg, Broker - Laundromat Specialists
PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
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