05: Other sale options

If your business is not sold or transferred to another family member, the other options available include:

Making a trade sale – selling part or all of your business can be a way of realising an optimum price. If the person exiting is not the sole owner, it is crucial that they involve other shareholders first and get their backing. They may wish to take over the share and this would be the easiest option. Alternatively, a new person could be brought in, but this would need the full co-operation of existing shareholders.

Opting for a management buyout – selling to the existing management team has advantages in that these are the people with the best knowledge of your company. However, it may not be as profitable as a trade sale. A further important consideration is whether you (as owner) want to remain involved, because a continued role may be more difficult to secure in the event of a management buyout.

Employee buyout – employees can take ownership via an employee trust, which holds shares on their behalf. This can be a highly flexible arrangement which can have tax advantages if structured in the right way. It can hold shares permanently, distribute them to individual employees –or do both – and can buy shares back from employees wishing to sell them. This type of exit strategy can be very effective and easy to complete. It can also provide continuity for employees and customers, and preserve the owner’s legacy.

Winding up and liquidating – the option to stop trading may be the only option if no buyer can be found. Assets would need to be sold and leases surrendered, and this could involve significant costs.