How do you sell your business to your employees?

07.30.19

How do you sell your business to your employees?

Selling your business to a few of your employees is one of the options that allow you the business owner to exit your business.  Depending on how many employees you want to sell your business to, you must ask yourself is every one of those few employees a key employee?  Do those employees get along with either other?

Focusing on one employee that you deem to be a key employee, like most employees, whether they are a key employee or not don’t have much capital to pay for the purchase of the business.

When selling to an employee, you can structure the deal so that employee pays you off over time with interest.  You can also structure the transaction to save taxes overall and make it more affordable for a key employee to purchase the business if taxes are less, it cost less.  A plausible way to do this is to create a type of continued salary payment to you from the company, in addition to the fee for your stock.

Your key employee can also buy all your stock now for some cash, a promissory note, and the continued salary payments.  Or, your key employee can buy a portion of the stock now and buy more over time to be the sole owner eventually.


Check out our other articles related to this topic:

How can you give stock to an employee

Should You Sell Your Business to a Key Employee or a Group of Key Employees?


If you would like more information or have any questions regarding this article, please reach out to MB Law at info@mb-law.law

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*This information is for general purposes only and is not intended to constitute any specific legal advice of any type.