Transferring Management Duties

As owners work toward their exits, they need to transition a variety of management duties to the new owner. To do so, it is important to create, at least five years in advance of your target date, a time-based plan that determines who will take over which tasks within a set timetable.

Some owners are able to accomplish this fairly quickly because they’ve already delegated management responsibility. We can help you figure out where you are on the management transition continuum.

Minimizing A Lender’s Risk When Financing A Sale

Whether you plan to sell your company to a third party or transfer it to key employees, co-owners or children, your banker can provide the cash necessary for a smooth transition.

In all scenarios, banks strive to minimize their risk. One way to do so is for buyers to take advantage of the Small Business Administration’s (SBA’s) loan guaranty programs that can protect the lender bank against loss in case of default.

The SBA’s 7A loan guaranty program is designed to facilitate the sale of a business interest by guaranteeing the loan repayment.

The “Old Company” to “New Company” Technique

You have made up your mind that you will transfer ownership of your company to an insider — whether it’s your children or key employees. However, you may not be ready to turn over total control of the company just yet. In fact, you may want to make sure you can undo any damage that could result from your successors failing to successfully carry on the business, as well as failing to pay you in full for the business.

Avoiding Disasters in Insider Transfers

Steve Smith was no different than millions of other baby-boomer business owners in that the thought of leaving his business was never far from his mind, no matter how far away his exit might have been. He daydreamed about transferring the business to his oldest daughter and perhaps to a member of his management team, yet he couldn’t gauge their passion for owning a business and hadn’t tested their management skills.


Five reasons owners sell their companies to their key employees

Five reasons that owners actually do sell their companies to their key employees:

  1. Owner has already achieved financial security. Owners who have already achieved financial security (separate from and prior to any sale or transfer of their companies) enjoy the luxury of selling to their key employees. They may have wanted to sell to them because they felt they “owed” their employees or even because they had promised to do so, but the reason they actually do so is because their own financial independence is secure.