Business Transfer: What happens to your Legacy?
Transfer of a business is a situation that all business owners must eventually face. The simple approach is to just sell and forget, but is it really this easy? You’ve invested years of your life into a business, built it from the ground up, your values and beliefs are part of what made your business a success. These values are your legacy, the character of the business, what happens when you leave?
Passing the business to a family member might retain these values, but isn’t always an option. Selling to a new Owner exposes the business to change, as the new Owner picks and chooses business values, doing what they will with employees, ultimately taking your Legacy and stamping their mark upon it.
There is another possibility though, there are a group of people trained with the skills to do the job, with your beliefs, who care strongly about the social impact of your business and the families it supports, people that you hand-picked for the job, your employees. Selling your business to your employees has many positives, here are some points to consider.
Business Transfer to Employees Drives Sustainability
- Keeps the same team which retains expertise.
- Clients and suppliers continue to deal with their trusted contacts.
- Employees with responsibilityover the business are motivated to continue the business success, and by extension, your Legacy.
- Management becomes participative,enabling greater information sharing leading to more informed decision-making (minimising excesses and waste, etc.).
- Reserving a portion of the net income is mandatory: softeningdownturns and providing financial soundness.
- Reduces the risk of a business failing within 5 years by 20 to 50 % (Oséo study, France)
Protect the Jobs You Created
- Prevents a new Owner stripping the business, selling off assets and handing out redundancies.
- Jobs stay local:The Employee-Ownership controls the working tool.
- Your Legacy passes on to people you have recruited and trained.
- The business becomes more than a money machine, it becomes an integral part of the community.
What business structure is best?
There are several ways that a business can be structured Sole Trader, Partnership, Pty Ltd Co. We have developed a Co-operative based model that avoids many of the challenges of a traditional management buyout.
Employees as Buyers
- You know them better than anyone else.
- You save time searching for buyers: they are right there.
- They know the business inside out and are directly operational.
- Many worker-membersimpliesgreater financial means than a single buyer.
- You protect the strategic and confidential elements of the business.
Employees to Owner Transition
- You are an expert who can provide valuable support to your employees as they take up the responsibility of business.
- You know the type of support needed by each employee taking over the business: management, sales, technical advice, etc.
- For the transfer, the business is converted directly into a worker cooperative; it keeps its trading company status (public or private limited company), identity and history.
- The business retains its usual partners: banks, advisers and suppliers.
Your Continued Activity in the Business
- Stay a part of your business as it grows, evolving while continuing your Legacy.
- Remain active longer,augment your retirement income with the business aspects that interest you most(R&D, skills transfer, sales, etc).
Employee Transfer Carries Your Legacy
- A solution that values employees in a society where:
- individuals are becoming more pertinent and knowledgeable;
- solidarity is an asset;
- individualismand inflexibility cope poorly with technological and social change.
- Reaffirms the values you instilled in the business through your employees.
- The business becomes intergenerational,ensuring future jobs.
- You may seed an empire – now there’s a thought!
NOTE: Staff are risk adverse and will more than likely reject employee ownership initially. Come and speak to us first so you understand the obstacles and how they are overcome before you speak to your own staff.
Would you like to get a copy of the “Sale & Purchase of Business Agreement” approved by all the staff. You are welcome to use this as a template for your business.