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How to sell a company to the employees

On Behalf of | Feb 16, 2018 | Buying & Selling Businesses |

While rare, it’s possible for a North Carolina business owner to sell their company to an employee. The primary advantage to selling to employees is that they already understand how the company works. Therefore, it can minimize any disruption that a sale may bring. However, workers generally don’t have the money to make the purchase.

Business owners may be at risk of putting their workers on edge by asking them to buy the company. This is because they might be nervous about the health of the company or whether or not they’ll have jobs in the future if they don’t agree to buy. Therefore, a business owner should only approach employees if they have expressed an interest to purchase the company.

It may be possible to overcome the fact that an employee doesn’t have the capital to make a purchase by agreeing to finance it. As a general rule, the employees will repay the owner with a percentage of future profits. Prior to selling the company, it’s a good idea to test an employee’s ability to run the company properly. For instance, it may be necessary to see an employee hit profit targets or interact positively with other workers.

When selling a business, the sale price should represent a fair market value. This may require reaching out to accountants or those who can estimate the value of business assets. Working with an attorney may also be an important part of the sale process. An attorney could review a purchase agreement as well as help a seller with any issues that arise during the sale process.