Selling Isn't the Only Option

You don't have to sell your business outright to break away. Bill Barrett of Bill Barrett Seminars in Rochester Hills, Mich., offers two creative alternatives to an outright sale.

Partnership

Team up with a younger broker who can handle the day-to-day business in exchange for a percentage of the business. In this instance, you need to be willing to keep up contacts with major clients and come back for the big deals. Structure the percentage you give based on how much involvement you want to have and whether your new partner can contribute cash or other assets to the deal.

Earnout

Sell your company not for up-front cash, but for a percentage on total revenues. Set a minimum purchase price and a cap amount you will receive, and then structure the deal to pay a higher percentage of gross revenues in the early years and taper off over time. Or set the payouts so that you receive a higher percentage of sales if revenues exceed a certain amount. It’s not essential that you remain involved in the business with an earnout structure, but it’s probably a good idea.

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