BusinessGuardianAngels.com
As an owner of a small business or medium sized business you probably consider your staff to be like family. Companies tend to have two or three employees that work great all the time, even on their off days. These employees have the potential to run their own business, but as yet they lack the capital or the right opportunity. When you are about to sell your business you want the right person to purchase it.
You have taken several years to ensure the business is successful. You have poured a lot of hard work into the business and money. The typical owner does not want to see this work become obsolete by the improper sale. In a business sale you may not want to alert employees of the sale. Some employees panic and leave or change their behaviours for the worse. So a general rule of thumb is not to tell your employees.
However, you may have an employee or group of employees you feel would like to run the business and would be up to the challenge. If you wish to sell the business to an employee you need to approach them quietly. Make it clear to this employee that you do not want others to know that you are selling the business. Ask them if they would like to consider the option. You can outline the value of the business, what you are hoping to gain from the sale and find out what their position may be.
Sometimes an employee may not have the funds to buy you out right. Depending on your situation this may work for you. You may state that a payment schedule over time is acceptable as long as the payments are made and the contract has specific stipulations. There is also seller financing to think about in order to help the employee purchase the business.
Even if you have an employee who is willing to purchase the business, you will still want to consider other offers. The employee will have a set time to complete the transaction and at the end of that time you will have another buyer if the deal falls through.
No matter whether you are selling to an employee or outside buyer you will need advisors. The advisors can be one business transfer agent or a team of solicitors, accountants, and appraisers. It is in your best interest to have a solicitor or transfer agent to prepare the paperwork to ensure that everything is legal. This will protect you and the employee.
In fact you should treat the sale just like you would an unknown buyer when it comes to the documentation, agreements you make, and the overall deal. When you speak with an employee about purchasing the business it is a good idea to have a solicitor recording the conversation. This way the employee and you are protected during that initial approach. You will also want a confidentiality agreement signed by the employee to keep the sale quiet until it has been processed.