As a business owner getting ready to retire, you may be wondering what will happen to your business now that you’re not interested in being involved in the day-to-day. There are a variety of options for transferring ownership of your business, and an experienced Springfield business lawyer can help you explore your options. Below, we review some of the ways you can plan to transfer ownership of your business to someone else.
Sell It to a Co-Owner or Co-Founder
If you founded the business with partners, you may be considering selling off your stake in the company to them. Many partnerships plan for this sort of event, drafting documents that detail what would happen in the event of death or disability in which the other partners agree to purchase the business from them. In fact, most companies take out special insurance in order to prepare for such an occurrence.
Retirement, however, is different. In order for this type of buy-sell agreement to work for everyone, your partner and/or the business need to have a lot of cash on hand. Otherwise, selling your shares won’t be very valuable to you as you depart the company. However, if you can swing this type of agreement, then it’s certainly a sound approach for transferring ownership of your company and getting a hefty payout in the process.
Pass It to an Heir
Many family businesses like to keep it all in the family generation after generation. Passing your business on to an heir ensures that your family wealth remains in your hands, but it also presents some drawbacks if your heirs aren’t very familiar with the business or otherwise lack experience in the industry. Some steps you can take to ensure a smooth transfer of ownership include leaving detailed instructions, ensuring the higher-level executives are trustworthy and know how to manage the business, and making sure that everyone knows their role in the future of the business. Your Springfield business lawyer can ensure you have the right contract in place to make this transfer go as smoothly as possible.
Sell Your Business to a Key Employee
If neither a co-owner nor a family member is an option, then consider selling your business to a key and trusted employee. This type of ownership transfer, when done with someone your other employees trust and respect, can be very beneficial. However, most key employees won’t necessarily be in the position to buy the business from you when you’re ready to transfer the ownership interest. In that case, you might wish to strike a deal in which you’re pulling equity out from the business or otherwise have the buyer finance the cost of your business over time.
Contact a Springfield Business Lawyer to Learn More
If you’re considering selling your business in preparation for retirement, you should speak with a Springfield business lawyer as soon as possible. Contact our offices today to get started.