The BizBuySell Small Business Community

  • Get Expert Advice

  •  • Find Local Service Professionals

  •  • Share Your Experiences

Is this possible

I would like to sell and stay on as a manager and receive a salary package.

Small contracting business
4 years in business lic and insured
60-70k per year
No company debt
10k in equipment
California based with ability to double volume

No User Photo

Answer This Question

max 5000 characters

Web Reference (optional)

e.g., ""

Review Community Guidelines

Help keep our Community clean and on topic. The BizBuySell Community is a place where you can discuss your questions, concerns and knowledge with others you can trust. It is not OK to use this forum to solicit others for personal or financial gain, or to rant about personal issues. It's all in the guidelines.

Submit Your Answer
Answers (1)
David Collins
Glentyde Capital Advisors, Inc.
CEO / Owner
Mecklenburg County, NC

Just some thoughts-at-large that might be of help as you are assembling your "pitch plan"...

• Review the terms of the insurance to see if the policy will survive a change of ownership. Being able to step into an existing policy rather than going through the underwriting process afresh can be a nice bene to a buyer.

• That "60 - 70k per year": Is that your top line, your net, or the pro forma net a buyer might expect post-deal assuming he makes certain changes to the expense structure (e.g., more marketing, fewer perks). Also, if that's an annual average over those 4 years, how is it trending?

• Re that "ability to double volume", it's likely that a buyer will have less confidence in that one than you have. Not at all to impugn your assertion, it's just that you have 4 years of seeing the biz and the market from the inside, and hence have a more informed view. But you might be able to turn than "information asymmetry" into an advantage, if you're sticking around as manager. Negotiate that your pay package will include a bonus component which is a hefty %age of any post-deal growth (in the bottom line, say). If the seller has doubts as to the likelihood of such promised growth actually materializing, he'll likely assign a low "cost" (to him) of granting such a provision, and thus he won't discount his up-front purchase price by much in exchange therefor. Hence if you're correct as to the growth actually showing up (and by staying on as manager you'll be in position to do your best to influence things in that direction), you'll be gaining a nice bonus package at a low cost to you in terms of the overall biz selling price.

• On the other hand, of course, if you find yourself negotiating with a wannabe buyer who's gung-ho about those growth prospects, you'd likely do better economically to sell him that growth in the form of a higher sales price. If so, be prepared for him to ask for a so-called "earnout" provision, whereby part of the total buyout price is deferred until such time when (and if) the growth actually occurs.

Best of luck with the deal!

Dec 4, 2012

Start a Discussion