Handing It Over
What's the best way for a father to sell the family business to his son?
QUESTION: Gary’s son has been running the family business for a couple of years. Gary wants to sell the business to him. How can he do it and make that transition?
ANSWER: I won’t do it using debt. I don’t want him owing me money. I would set up something where a percentage of profits go to you as the former owner for a period of years up to a maximum, where he does buy you out by paying you the lion’s share of the profits for a few years. That way, if profits go down, he’s not in trouble with debt.
But don’t come in and try to tell him how to run the business anymore, because you don’t own it anymore. That’s a big deal in a family handoff.