Sell a Business and Stay as an Employee? Yes, It’s a Thing.

Selling a business is like selling the family home, or as some have put it, giving away your baby. After years of blood, sweat, tears and sacrifice, many find the day to day grind overwhelming and want to take time to spend with growing families, travel or themselves. While some business owners want to walk away from the business they created, others, especially smaller businesses, may do better selling the business but staying as an employee. This arrangement can have its advantages and drawbacks, but it’s much more common than many entrepreneurs appreciate.

How it works

In essence, you sell all or most of your business (almost always a controlling interest) in the business, to a professional management team. The new team likely keeps the business much as it is, but takes over, and often improves, day to day operations, especially marketing, communications and purchasing. You get paid for the business you created, return as a day-to-day employee with paid vacation and benefits.

Pros of Selling a Business and Staying as an Employee

1. Financial Gain and Stability:

- One of the most apparent benefits of selling a business and continuing to work for it is the financial gain. You receive a lump sum from the sale, which can provide financial stability and open up new opportunities. Often entrepreneurs retain a stake in the business, which means as a new owner takes over growth, you can get paid now, and again in the future as the business grows or is eventually sold to new owners.

2. Reduced Risk:

- By selling the business but staying involved, you can reduce some of the entrepreneurial risks associated with starting and managing a company. You know your customers better than anyone, and staying involved helps to look after the community you created, without maintaining all the risk of running an ongoing business.

3. Passion and Purpose:

- If you're deeply passionate about your business and its mission, selling while still working allows you to continue pursuing your vision.

- This can be fulfilling and provide a sense of purpose beyond just the financial aspect.

4. Mentoring and Legacy:

- Staying involved post-sale gives you the opportunity to mentor the new leadership, ensuring that your business continues to thrive while someone else is handling day to day operations. In addition, teaching new providers your hard won knowledge. You can leave a lasting legacy by imparting your knowledge and values to the next generation of leaders.

Cons of Selling a Business and Continuing to Work for It

1. Loss of Control:

- Once you sell your business, you no longer have full control over its operations. You may need to adapt to new leadership and policies that differ from your own. Many entrepreneurs loved having day to day control, even as it became a weight around their necks. This loss of control to a new manager can be frustrating for some entrepreneurs.

2. Emotional Attachment:

- This is your baby, and now things are going to be done somewhat differently. While growth and professional management are essential to business development, it can be hard to see things going in a different direction than you’d envisioned.

5. Depending on a new ownership team

- Not all money may change hands right away. Its common for business acquisitions to be paid to entrepreneurs over a period of time to ensure that a key employee (You!) stays engaged. At the same time, you have input, but limited control over day to day decisions. You need to have faith that the new management team is one you can work with and continue business growth.

The decision to sell a business can be lucrative, both now and as the business continues to grow under new management. Continuing to work for the business you built helps to protect your legacy and your investment. In addition, it can be hard for entrepreneurs to hand over the reigns to new management while still remaining engaged team members.

Before making a final decision, it's essential to carefully assess your motivations and expectations. Consider your long-term goals, the terms of the sale, and your ability to adapt to a new role within the company.

If its time to discuss options reach out to our physician-lead leadership team anytime.

doctor@waterloomedicalcosmetics.com