Why would I transfer the business to outsiders?
Minneapolis attorney Sally Grossman discusses reasons why a business owner might decide to transfer the business to outsiders.
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I think the main reason to transfer to outsiders is if your goal as an owner is to get the highest and best price. There’s nothing wrong with that. I mean, a lot of people will say, “I’ve worked hard my whole life. I want to get out of this business now and I want to get what it’s worth.” And, your highest and best price is normally going to come from outsiders. Usually your Buy/Sell has a little bit of a sweetheart price. Your inside management can’t afford to pay full dollar and usually when you transfer in a family, there’s some gift or a bargain sale element in it because you’re trying to swing the deal for your kids.