Many business owners in their mid- to late 60s find themselves wanting to work less, but not quit completely, knowing there is a good upside to their businesses and enjoying the challenge of keeping the growth trajectory steady, or at an accelerated rate. These owners feel that they are like their business – not ready to retire or go golfing every day for the rest of their lives. Most of the time, they would like to help with the ongoing growth of the enterprise, but would like more time to travel and have some fun, while taking much of their equity out the business.
Private equity and small investment groups look for opportunities to acquire growing companies, ideally with niche market dominance, where the seller stays on for a period of time to transition the business to the new owner. This allows the seller to help the buyer maintain the success and have a vested interest in acting as a consultant. Many times, this type of transaction lets the seller maintain 20% to 30% equity and to share in the growth of the company at [RETC1]three to seven years in the future. With this type of structure, the seller often gives the buyer a first right of refusal to purchase the equity, frequently with a pre-determined formula.
The 20% to 30% equity maintained the seller can be equal to or greater than the original price paid, due to the increased sales and profits three to seven years later.
As a seller or a buyer, if you would like a confidential conversation about how to prepare, please contact me on my cell, 954-579-4687, or by e-mail at email@example.com. My LinkedIn profile is: http://www.linkedin.com/in/dolansales