Running a business as part of a team allows you to play to each other’s strengths, but when you disagree on the long-term strategy for your company, it can be quite difficult to navigate and often becomes very personal. Here are some suggestions for management teams who have different views about the ideal time to sell their business:
Partial exit and change of role
This is a halfway house and allows the disgruntled shareholder the chance to step back and the time to do other things, without completing cutting themselves off from the company. It can be achieved via a company buyback of own shares or the other shareholder/s can buy the shares from them directly.
MBO for the exiting shareholder
By allowing an existing employee to buy the shares of one of the founders, you can provide a step up for a valued member of the team into a position of leadership. This has the advantages that you ensure that your company’s culture remains intact and, whilst new ideas may be brought to the table, there isn’t a drastic change in control or direction of the business. There could be financing and tax issues to consider here, so seek advice before you decide on this as a solution.
Bring in MBI or investor
Recruiting a new member into the business, who is able to buy shares immediately as a management buy-in candidate, bring new ideas and energies to the company. Similar advantages can be gained by using this opportunity to obtain external investment from a private equity institution, a venture capitalist or a business angel. These solutions allow the dissatisfied founder to exit, but the remaining founder/s have the support of new skills to take the business forward.
Go to market
If some of the founders wish to exit, it may provide the others with the impetus to take some action and research what the market is likely to offer. Those shareholders who hadn’t intended to exit may change their mind if they are presented with an attractive offer. Alternatively, an incoming purchaser may be able to provide an ongoing role for those founders who wish to remain and this could take the business in a completely new direction. We are able to assist you in researching the market on a confidential basis, so get in touch if you would like more information about this.
It’s never easy working with others, even family members, who can all have different personal objectives and honesty is key to ensure harmony prevails and doesn’t affect the financial results of the business in the short term. Take action to discuss any disagreements between you before they get out of control. We are able to act as a facilitator to assist you in having those conversations as well as providing any tax advice about your options. Keeping an open mind about the possibilities and tackling these issues early ensures you have as many options as possible to secure the long-term success of the company.