What are My Options if a Key Employee with Limited Funds Wants to Buy My Business?

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.


Have a question for JT? Don’t worry, all questions will remain anonymous! You can email JT at jt@exitstrategies360.com.

JT Kraai

As CEO and Founder of Exit Strategies 360, JT takes extreme pride in helping business owners prepare and navigate the business sales process.  As an M&A Advisor, Broker and Consultant for 20+ years, he has structured hundreds of transactions for virtually any scenario, keenly understanding the needs of both buyers and sellers. 

JT indicates, “Most business owners are unaware of their options when it comes to preparing and selling their business.  These options can increase cash and decrease taxes by hundreds of thousands of dollars.  An educated decision is always the best.”

He then adds, “An owner’s weakest link is fear… without knowing how to proceed, they don’t.  We offer the tools, process and roadmap to proceed with confidence.”  

With over 25+ years of entrepreneurial ventures including five start-ups/sales, he has a solid understanding of what it takes to successfully create, expand and maximize business values. JT instinctively has the expertise and capacity to think about critical factors affecting the success of a transaction, providing an extremely valuable perspective and advantage for his clients.  

According to JT, “You’ll probably do this only once in your life… let’s do it right.”

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