Q: A key employee wants to buy my business but doesn’t have that kind of money. Any good options?
JT says: Yes, options exist. With solid financials, many SBA-backed lenders will accept a 5% down payment from a key employee. If they’re already a partial owner, they may even qualify for 0% down with 100% financing. Depending on your situation, it might be the perfect solution for transactions up to $5M. Plus, you benefit by receiving your sale proceeds up-front with a nominal (or non-existent) carry-back note.
Additionally, options may include a Stock Redemption Plan or an array of Phantom Stock structures. Both can be tailored to your specific needs and timelines.
When considering a sale or transition, these options deserve a closer look when there’s a willing key employee.
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