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Selling To A Key Employee; Learn From Firsthand Experience

By September 22, 2020No Comments

In many instances, selling to a key employee is a business owner’s dream. After all, the key employee understands the business culture the owner has built and most importantly cares about the success of the business.

So, if you have a prospective buyer in a key employee, why would a business intermediary be consulted?

As one of our previous clients once said, “You don’t know, what you don’t know”.

Often this is the buyer’s first purchase and the seller’s first sale. An experienced business broker will have years of experience in business selling and that knowledge is highly beneficial to a business owner at the time of sale.

Most business owners and key employees have been talking casually about the possible sale of the company for some years. This close relationship is also the reason why a business broker is highly recommended. They can provide a business valuation so that everyone involved feels the price paid is fair.

Guidance and mediation throughout legal agreements, especially if the business owner is selling one of multiple locations, can avoid major headaches during the final sale. For example, in the case of one of ROI’s previous clients, Dean Carlson of Get Fit New Hampshire, our Vice President, Denis Mezheritskiy, guided Carlson through the sale of his business to a key employee in 2019.

Removing the awkwardness from the negotiation process allowed for clearer communication and an easier transition process. An experienced business broker will be able to speak to both parties’ best interest while keeping it about the value and worth of the business.

One of the biggest hurdles in an inside transfer is financing. It is sometimes overwhelming for an employee to apprehend that they can actually afford to buy the business. The fact is that banks love an inside transition. These types of loans have a higher probability of success. After all, this is someone who is familiar with the work, the customers and the employees. An inside transition minimizes the turbulence of transferring ownership.

In Get Fit’s example, their organized financial records assisted in differentiating the profits from each location. Carlson was able to keep using the name for their remaining location for up to one year to assist in their transition to other ventures. Throughout the whole process, Denis Mezheritskiy was able to keep the process moving forward, provide paperwork, professional advice and celebrate with them in the end. You can hear about the sale on the podcast How to Exit, Business Exit Strategy here.

If you believe you’re ready to introduce a business broker into your sale to a key employee, reach out to ROI Corporation to make the road to success clear. 

About ROI Corporation

ROI Corporation, based in the Boston market, has been involved in the sale of businesses and real estate in over 30 states since 1997. They also assist in the transfer of business ownership between generations and to key employees and management teams. ROI serves all of New England including MA, NH, RI, ME and CT with two divisions; a main street division serving smaller businesses as well as their middle market M&A division. Their Marietta, Georgia office, specializing in Service Distribution & Manufacturing Companies, serves the southeast United States. For more information, please visit us on the web at www.roimergers.com or call (781) 682-6209.