Mergers and Acquisitions

Internal Sale

Internal Ownership Transfers

Planning for success in succession.

Nearly all sectors of society have their rites of passage. The symbolism and importance to culture and legacy differ, but every rite is a vital growth journey.

Your business has its own rites of passage along your entrepreneurial journey – it has a culture and legacy you’ve created, nurtured, and grown. One rite of passage for an entrepreneur is planning for the transition of business ownership. For those involved in this rite of passage it is a monumental ritual – financially, professionally and personally.

If you’re at the stage in your business journey where it is time to consider succession and exit options, an internal ownership transition may be the next logical step. It will not only allow you to exit your business, but also will ensure your legacy lives on after your departure. Transitioning ownership is an exciting and emotional time, it is not always easy to let go of something that has been such an important part of your life.

But ultimately, when the right plan is in place, you have the pleasure of watching your business move into the next phase of its journey, as you move into yours. An internal ownership transition is a legendary rite of passage, Destined can guide you through the process so you can achieve your destiny.

The Transfer

How to transfer ownership to a team or family member.

Destined is here to guide you through the different options for transferring ownership of your business internally.

Sale

The sale route will come with some loose ends to knot here or there, of which you’ll need to be aware of the monetary implications for the buyer.

This will mostly be around the financing of a sale, as most often, a family or team member won’t have the funds available to pay for the business up front. There are several ways to transfer ownership each with its own tax implications: you can enter into a payment plan, the buyer can obtain a loan from a bank, or a stock buy-back program can be implemented. Or a combination of these options can be utilized.

Partial Sale

Selling a percentage of ownership enables you to take some money off the table; potentially maintaining control while you ensure the next generation can run the business as owners – not just as employees.

If you retain some level of ownership you have the option to stay involved – dependent upon your desires. This may not mean involvement with the day-to-day, but you’ll certainly still have a say in larger organizational decisions. If you do choose to remain involved, it may provide a continuing source of income as you transition into an advisory role.

Tax implications will also apply here, depending upon the way in which the ownership is transferred and the total percentage sold.

Transfer

If you’re fortunate enough to have family members working with you, who largely share your business vision, you have the opportunity to transfer the business to a family member.

If they‘ve demonstrated core competencies in the trade and solid leadership potential, an internal transfer may be the right fit for your family business.
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Internal Options

Determine who will take the helm.

If an internal sale is the best exit strategy for you, the first step will be to consider who will be the next captain of the ship.

We call a clear vision for succession an exit plan. Building an exit plan will not only clarify your intentions for the future of your organization but will also ensure a seamless transition as the plan is executed.

You will need to deftly identify the leadership team that can continue the journey on the map you’ve laid out, while also exploring uncharted territory as new opportunities arise.

Once you’ve identified the next generation of leaders, there are several internal ownership transfer options to consider:

Family Sale
Team Sale
Team Transfer

Sell the business to your top brass.

One possible way to transfer ownership internally is to identify the most competent leaders within your organization.  Your leadership team is a resource that embraces the responsibility of your culture and is honoring your vision daily. They already have the abilities, the experience, and the right attitude.  An additional benefit is that they already know how to inject their operational ideas, ideas that work in symbiosis with yours, to potentially reach new markets, clients, and opportunities.

Transferring ownership to one or more members of your leadership team is not only an exit strategy for you, but it also is a tool to incent and retain your team. The ultimate reward for a leadership team is business ownership.

INTERNAL TRANSFER OPTIONS

Exit Strategy Planning

Succession

Set your successor up for success.

The candidate you choose to continue your legacy – whether familial or managerial – will have an impressive track record in your business. Their experience and competence are a solid foundation on which to position them to gradually take the helm and steer the business toward its next level of growth.

Honesty throughout the transition is key – with the intricacies of the business made clear, your successor can better evaluate how they will steer the business into the future. It will be imperative then to perform a joint assessment of all potential risks in the business while also confirming your strategic assets are secure and transferrable to the next generation.

Your Legacy

Safeguard your business legacy.

Transferring ownership is a critical part of your business journey – and it’s important to us too, we’ll be by your side from start to finish. We’ll ensure that when all financial aspects are decided, new leaders are leading, and your life’s work is safely in the hands of the next generation, you will be thrilled with the outcome. A business legacy established with a heritage that stands the test of time.

So then, when is it the right time to transition ownership of your business? Maybe you’re ready to move on to your next journey now, or you want to see your business reach previously unattained realms, or it’s time for it to become legend in the hands of the family members or partners you love and trust – whatever your motivation, we’ll help you build an exit strategy and determine when the time is right.

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