With all the family wealth in a business, and no successor to come to the fore, it sometimes means that the business just has to be sold. The question remains: to whom should you sell it? If you can answer that question, then even more important questions follow.
Can you trust the buyer to preserve your great efforts, the livelihoods of your employees, and the business itself?
To sell the business to a larger company may mean leaving it only to have the buyer gut it to only those elements the buyer wants to keep. Likewise, selling to venture capitalists means distilling the business to a profit-center to then be sold for profit.
If neither of these consequences sits well with you, then there is another option to consider in Overland Park and elsewhere.
Consider an ESOP - an "Employee Stock Option Plan."
If you have an established business with established and trustworthy employees, then these employees might make good owners with "skin in the game."
As many have discovered over the years, there is much to be said for selling the business to the employees themselves in the form of an ESOP. And much ink has been spilled on the topics of employee ownership and the ESOP transition before, but a recent Forbes article titled “The Better Exit Strategy: ESOPs Satisfy Business Owners And Preserve Their Legacy” is worth your read.
In the end, the ESOP allows the owners to sell and the employees to buy in a tidy package that helps everyone. Moreover, it preserves the business, and the legacy of the founders. The owners can even stay on as employees themselves and continue at the helm, if the deal is structured accordingly.
That noted, an ESOP is not a strategy suited to everyone and every business. There are some cases where it went terribly wrong! Nevertheless, ESOPs are quite an intriguing and powerful option for a closely held business. Take a look at the original article and others like it to learn more.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Forbes (February 12, 2014) “The Better Exit Strategy: ESOPs Satisfy Business Owners And Preserve Their Legacy”