Internal Transfer – Harder Than it Seems
Let’s pretend you’ve been operating your business for many years and you have a pretty good small team on payroll. Let’s call them good eggs – they show up on time, if not early, and put in an honest day’s work. These are folks you’re proud to have face time with your clients, the types who not only don’t embarrass you or the company, they actually enhance the operation’s value. You still work a ton of hours, but that has more to do with the fact that you’re still fully engaged in what you’re doing, not so much that you have to baby sit the team. Got the picture? Is that a fairly accurate depiction of Your Company, Inc.? Thought so. Good for you.
So perhaps you’re planning to retire soon, or at least you hope to. Your kids, while being lovely, upstanding citizens, don’t want your business. It’s not personal; it’s just that they have a life plan that has little or nothing to do with operating your small company. So the next logical choice is the team, which makes sense. They know the ins and outs of the operation, wear well with your suppliers, and are respected by your customers. They speak the language and know where the bodies are buried, so to speak. You’ve done a good job in recent years giving them more responsibility knowing at some point you’d be exiting stage left and leaving behind a capable team to operate the shop. There are but two minor issues here.
They don’t want to be the next owner(s) and, even if they did, don’t have the money to buy you out. Ugh. (And you can try and hand it over to them with all sorts of favorable terms and timelines, but you probably know how risky a proposition that could turn out to be.)
For as hard as you’ve been working over the decades, you may not have had the time to appreciate just how rare you are. You thrive on being a risk-taker. You’re driven to set the alarm clock for an early rise – if you even need that wake-up call anymore. It’s the quiet, predawn thinking sessions, the time spent staring at the ceiling wondering how you’ll continue to make it all work, that has kept you engaged all these years. What you likely don’t realize is how rare this makes you. Our experience and data shows us that it’s only 1 in 10 who claim they want to own a business that will actually fully commit and make an acquisition. Bear in mind, that’s 10% of those who raise their hands to express interest, so the percentage of all candidates, including these worker bees referenced above, is far lower. Not everyone is qualified to own and run a business and, truth be told, not everyone is as nutty as you and I are to actually do it! This includes your good soldiers, the ones who stand by you in the day-to-day battle in the business but who don’t want to even be #2 in charge, never mind being the next owner with sleepless nights.
Great, you’re saying. Knowing I’m a rare soul and $5 will get me a cup of coffee… and what else? Maybe nothing else. But maybe you have a business that no one in your midst wants or can afford but is still one that has value in a private, confidential sale. Odds are that 1 in 10 type of person will be playing on his/her iPad this evening, looking at businesses for sale, dreaming of the right one to pop up on screen and into their lives. Don’t lose hope. Keep the faith. Explore the market.