The three T’s in selling your business to management


Creating a comprehensive checklist for selling a business is essential for ensuring a smooth transition when transferring ownership to your management team. By following a well-structured plan, you’ll have better control over the process, making it both timely and efficient.

One of the key considerations when selling your business to employees is to carefully plan the timing of the sale. This will allow you to align the process with your personal and financial goals.

When selling your business to a key employee, it’s crucial to establish clear payment terms. This involves determining whether the transaction will be structured as an asset sale or a stock sale, which can significantly impact the taxation of any profits. By setting up the terms beforehand, you’ll maintain control over potential tax implications and avoid surprises down the road.

In summary, creating an effective plan for selling your business involves careful attention to detail and thorough execution of each step. By considering the timing, terms, and method of selling, you’ll have greater control over the process and increase the likelihood of a successful transition to your management team.


The three T’s of selling their company

to management are timing terms and taxes.

First, on the timing. You are in complete

control when you want to transfer

the ownership. And typically you’ll do that

when it’s confirmed to you that you’re going to be financially

independent of the business once you

receive the proceeds from the change of

control transaction.

The second is the terms which would be:

“how are you going to get paid”, “whether

it’s going to be sale a stock profit

interest, some form of deferred

compensation”. And the third is taxes. You

can determine if you want to elect

installment payment method on the

proceeds that are coming to you in

a seller note or to accelerate and pay

capital gains. You can also

receive distributions of profit and then

ultimately non-qualified deferred

compensation benefits that would be

subject to ordinary income taxes. You could

time that so that it perhaps would

coincide with when you defer

your 401k into required minimum

distribution at 872.

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