Many closely held companies have only two potential sets of buyers – children or grandchildren of the founding generation or managers and other employees of the enterprise. The market of third-party buyers for closely held companies can be thin, so when family members are not suitable buyers of a company, often the best solution is to sell to employees. But sales to employees are unlike sales to third-parties or family members, involving complex issues of how to finance the sale, transition of management and control, employee retention, and tax concerns. This program will provide you with a detailed discussion of the major issues of selling to employees, including valuation, how the sale price is financed over time, transition periods, retaining managers not in the buyout group, liability, and more.
Paul Kaplun, Venable, LLP
John Wilhelm, Venable, LLP
Part 1 – January 20, 2015 from 12 PM – 1 PM EST
• Long-range planning of sales to employees – and benefits over selling to third parties or family members
• Identifying the right employees to whom a sale is practical & preserving enterprise value
• Negotiating with employees over sales price and valuation issues
• Transitions of management control, including retaining seller/founder for a period of time
• Practical governance issues when employees are identified as potential buyers
For more information on Part 1, please visit the Illinois State Bar Association webpage.
Part 2 – January 21, 2015 from 12 PM – 1 PM EST
• Overview of alternative structures and the tradeoffs of each
• ESOPs – structural, practical and tax issues, including leveraged buyout options
• Use of company redemptions of founders to accomplish a transfer
• Crucial issues in drafting “earnouts” on sales to employees
• Seller financing options, including long-term notes and security interest in assets
• Creditor and successor liability issues
For more information on Part 2, please visit the Illinois State Bar Association webpage.