By Founder & CEO Scott Savage.
Recently, I was introduced to a business owner who had just completed selling his company to a long-time loyal employee. He described to me that despite higher offers from private equity-backed buyers, he chose to sell it at a lower price to a key employee who has the respect of other employees and the business' customers.
The business owner felt strongly that had an outsider purchased his small business, then before too long his key employees would be looking for another job. Additionally, he reasoned that his loyal customer base would be better served - after all, they are the reason he was going to be able to exit on his terms.
The buyer came up with a down payment. Rather than using a bank to finance the balance of the purchase price, the business owner took a seller’s (promissory) note, so the new owner can pay off the balance over time with profits from the business.
All business exits have pros and cons, but I am convinced that the sentiments shared with me and the actions taken by this benevolent business seller increase the likelihood that the business he started nearly 30 years ago will survive and thrive!
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There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.
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