Selling PART of a Business
Finding a BuyerSelling part of a business means finding someone that wants ONLY part of a business. This can be one of the many challenges selling part of a business entails insofar as someone that will consider buying a portion of the business will be concerned about any number of potential issues. Consider the following:
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- How much control will the new partner have – versus how much he or she will want – and how, and over what period of time, will that control vest?
- If there are two original partners each owning 50%, will the remaining partner want a new 50% partner who he or she may not know?
- Does the remaining partner have any control over who buys the exiting partner’s share?
- Can the partners agree on a value for the business and, thus, the share being sold?
- Do the remaining partners have a first right of refusal to purchase the exiting partner’s share?
Issues AboundI’ve written previously about buying a part of a business – i.e. from the buyer’s view – but never directly about selling part of a business; the view of the remaining partner(s). If the exiting partner wants out, the biggest question he or she is likely to have is how much is their share of the business worth. But the remaining partner(s), though certainly concerned about the value of the exiting partner’s share, have much more to concern themselves with. For example, will they be able to find someone that will be able to acclimate to the environment and personality of the business; someone they can get along with and that will fit into the business’ culture? A logical solution is for the business or the remaining partners to buy out the exiting partner. Can the partners – remaining and exiting – agree to how the business will be valued? What if the business and the remaining partners don’t have adequate capital to buy the exiting partner out by writing a check? Can the parties agree on how the exiting partner’s share would be paid for? Are there any restrictions on the exiting partner’s ability to sell? There better be! The remaining partners are unlikely to want a competitor to be their new partner!
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