If you are in your 60s or 70s and own a business you may be thinking about retirement at some point. But for many business owners, this can be a scary thought. What do you do with all of your time? Will you miss running the business and seeing the employees every day?
Fortunately, there is a way to test the waters on this without fully retiring. At the same time, you can secure your financial future and not have to carry the burdens of owning the business.
When you sell your business many buyers like to have the seller stay on after the sale and help to train the new buyer and make sure that things continue to go smoothly with the employees and customers. There is usually an employment agreement that goes with the sale of a business. The employment term can be as short as a week or as long as a number of years.
Working part-time into your 80s
One of our clients was an engineering firm in the Hudson Valley area of New York that had three partners. The buyer also owned an engineering firm but he already had two locations, one in New York City and one in New Jersey.
He wanted someone to be able to continue to run the new location that he just purchased without having to be there all of the time. This fit in well with two of the sellers who wanted to transition into retirement.
Two of them stayed on for a year and one of them has continued to work there part-time for over a decade into his 80’s. He enjoys coming in twice a week and helping out. It keeps him busy enough but not too busy that he can’t enjoy his grandchildren and hobbies.
Ready to Retire Yesterday
Another one of our clients was 70 with new grandchildren. He owned a technology firm on Long Island. He was ready to retire without a transition but thought that he would need to stay on for a certain amount of time. Fortunately for him, the buyer didn’t need him to stay on at all.
In fact, in their case, they didn’t want the seller to come in at all because they wanted to start fresh without the previous owner’s way of doing things. You would think that the buyer would have been from the industry but he was an investor with an Ivy League pedigree that was confident in his abilities to learn quickly and lead the new firm.
Understanding your Desires
As a business owner, it’s best to try to have an understanding of how your ideal transition into retirement would look like. If you are working with an experienced business broker, they can look for the right buyers to match what you have in mind.
It’s not always about getting the highest price. It can make a big difference if a buyer with the best price requires you to work there for two years and this is not something you want to do. Better to look for a buyer that has some flexibility in accommodating your desires and can offer a fair price.
Doing what you Love
Another example is a Driving School that we sold in Westchester County, NY. The school was owned by two brothers. The younger brother loved to go on vacation and just wanted to stop working after providing a brief transition. The older brother was the president of the company. He liked work in general but didn’t want some of the responsibilities of ownership. And it felt unfair to split the profits with his younger brother who was taking all of the vacations.
We located a private equity firm that was able to accommodate the older brother. The Driving School had over 50 high schools that they gave driving lessons at. One of the favorite activities of the older brother was to deliver gourmet chocolates to his customers around the holidays. He didn’t like doing the administrative work, so the private equity firm was happy to have the older brother continue on for over 5 years being the face of the business, while they modernized the back office systems to make it easy for them to handle all of the administrative work.
A good business broker will find out what the goals are of buyer and seller so that the right match can be made and any discrepancies can be negotiated to work out something for all parties involved.
Synergy Business Brokers has been selling businesses for over 15 years. We focus on selling businesses that have annual revenues of $600,000 to $40 Million+. We focus on industries such as healthcare, technology, distribution, construction, manufacturing, services, engineering, education, and transportation.
No Upfront Fee
We don’t charge a fee until we sell your business. Some of our buyers and sellers are repeat clients so it’s important that we understand everyone’s needs so that we give both buyer and seller the best opportunity to not only have a good transaction but to also have a good transition of the business as well.
For a confidential consultation please fill out our easy Seller Registration Form or call (914) 738-9350. We have Brokers in NJ, NY, CT, and MA and sell businesses throughout the United States.