Sell a Business

Every transition is different, but usually happens in five distinct stages:

1. Exploration

In this stage, I will work with you, the owner, to try to get a sense of how well you are prepared for your exit. We will look for answers to questions like:

Will you have enough funds to live?
Do you know what you will be doing?
When do you plan to exit?
Who else will be impacted by your decisions?

During this stage, I will teach you everything there is to know about converting your business to a worker cooperative or some other form of worker ownership.

2. Assessment

In this stage you will be working mostly with your trusted advisers to find out if worker ownership is a good fit for your business.

3. Preparation

In this stage, you will get yourself and your business ready for the sale. Maybe you need some time to accumulate retirement funds outside your business. Maybe you need to take some steps to maximize the transferable value of your business. Maybe you need to separate your personal finances from those of your business. Lenders will need three to five years of financials to make their determination. They will want to know if the business can be successful without you.

At some point, it will become necessary to let your employees in on the plan. You may have embraced the idea. That does not necessarily mean they will. For them to buy into it, they will have to go through the same educational process you just did. They will want to know in great detail what to expect.

4. Structure the Transaction

If there is agreement to proceed, the employees may set up a new entity with its own leadership. They will hire their own advisers and conduct their own feasibility study. They will obtain financing commitments and finally one day everything will be ready for the closing.

5. Follow-up Support

Unless steps have been taken to assure continued management, lenders may require technical assistance contracts. If you are financing a portion of the sale, you will also have an interest in the continued success of the new entity and a supporting role may be designed for you.

Legal Guide Cooperative Conversion