The consideration to sell all or part of a business is likely one of the largest, most personally impactful financial decisions your shareholders will make. There are several strategies to consider, so it makes sense to engage with the right Advisors and pick the best strategy. Affinity Ventures has years of experience with these options and can help you talk through what may work best for your situation.

At a high level:

a) 100% Sale or Buyout

  1. Usually an asset purchase, although it is possible to negotiate a stock sale
  2. Generally results in a expeditious process, majority of cash at close, and a quick transition of the owner from the business. Confidentiality is key, make sure your advisor has a process in place

b) Private Equity Recapitalization or Recap

  1. A stake in the business is sold or transferred in return for cash and other consideration
  2. Most buyers prefer a majority interest and want sellers to own stock / continue in the business.
  3. Through our structured 5-step facilitation process, this strategy often results in the best partner, with the highest valuation and chance at “getting paid twice.”

c) Management Buyout or MBO

  1. Often an internal transaction, with the assets or cash flow of the business used to finance an existing management team’s purchase directly from the owners
  2. Rarely do existing managers have skills, access to needed equity or additional resources needed to significantly grow the business post purchase
  3. May be the easiest transition but rarely produces the highest value

d) Employee Stock Ownership Plan or ESOP

  1. Similar to a MBO
  2. Can yield significant tax savings and uses traditional sources of capital
  3. Valuations are generally lower, comes with complicated reporting requirements and can result in lower cash flows when departing employees redeem their shares