The idea of selling a company to a manager or a group of employees isn’t unheard of. In my decades of being an entrepreneur and consultant to other business owners, I’ve listened to many conversations about transitioning organizations to workers. But should you actually sell your business to your employee? What are the holes and blindspots that you need to consider?
In this episode, I discuss the advantages and disadvantages of selling your company to a key employee. I reveal the tax and legal risks involved in transitioning your business to an employee or group of employees. I also explain how hiring financial advisors can help manage risks during the selling process and share some different exit planning tools and approaches to use when selling your company to an employee.
TOPICS DISCUSSED: • The advantages and disadvantages of selling your company to a key employee • The survival rate of transitioning a business to a key employee • The different exit planning tools and approaches to selling your company to a key employee • The installment sale approach to selling your business • Legal and tax risks associated with the installment sale approach • Exit planning with the employee stock option plan and how it works • The disadvantages of using the employee stock option plan
BIO: Justin A. Goodbread, CFP®, CEPA, CVGA, is a nationally recognized financial planner, business educator, wealth manager, author, speaker, and entrepreneur. He has 20+ years of experience teaching small business owners how to start, buy, grow, and sell businesses. Multi-year recipient of the Investopedia Top 100 Advisor and 2018 Exit Planning Institute’s Exit Planner Leader of the Year.
DISCLOSURES: Investment advisory services offered by WealthSource® Partners, LLC (“WealthSource”). Nothing herein constitutes an offer or solicitation to buy or sell any security; this video is distributed for informational purposes only. Furthermore, nothing herein should be considered as investment, tax or legal advice and/or used to make any investment decisions. You should consult with a professional adviser to see how the information contained herein may apply to your individual circumstances. All investing involves risk of loss and nothing herein should be construed as a guarantee of any specific outcome or profit. Past performance is not indicative of future results. All market indices discussed are unmanaged, do not incur management fees, and cannot be invested in directly. The statements and opinions expressed are those of Justin Goodbread and do not necessarily represent the views and/or opinions of WealthSource. All statements and opinions are current only as of this video’s original publication date and are subject to change without notice. WealthSource has no obligation to provide revised statements and/or opinions in the event of changed circumstances.
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The Exit Planning Institute's Leader of the Year is awarded to a nominee who is a CEPA credential holder who has made a significant impact or contribution to the exit planning profession or overall community through innovation and influence and is viewed by the Exit Planning Institute as a thought leader, risk taker and specialist while showing characteristics of collaboration.
Advisors who wished to be ranked in Investopedia’s Top 100 Financial Advisors list either self-submitted answers to questions compiled by Investopedia or were nominated by peers. Rankings were determined based on number of followers and engagement on social media, primary contribution to professional industry websites and their focus on financial literacy. Neither performance nor client experience, however, were considered. No compensation was paid by WealthSource Partners, LLC or Justin Goodbread to secure placement on Investopedia’s Top 100 Financial Advisors List.
