If you’re exploring retirement options, an employee business buyout could be the best move you haven’t considered. This strategy helps you transition ownership to the people who know your business best—your team—while preserving legacy, protecting culture, and getting you paid.
The Emotional and Strategic Benefits of Selling to Your Team
Your employees already know the business. They’ve helped build it. They understand your customers, your culture, and your mission. Selling to them ensures continuity while offering you a meaningful and mission-aligned exit.
Here’s why more owners are choosing this path:
- Legacy matters. Watching your company thrive in the hands of those you trust is far more satisfying than watching it get absorbed or dismantled.
- Your culture survives. Employee-owners are more likely to preserve the business model, service style, and leadership philosophy you created.
- You reduce disruption. Customers, vendors, and staff experience a smoother transition.
- You support your team. Selling to employees rewards loyalty and dedication while setting them up for wealth-building.
Letting your team carry the torch gives you peace of mind and an exit strategy rooted in purpose.
Why Traditional Exit Plans May Not Work
It’s not that selling to a third party is inherently bad. But it often comes with trade-offs that many owners don’t realize until it’s too late.
Problems with third-party sales:
- The buyer may cut staff or relocate the company.
- It may take 12–24 months to close a deal.
- Confidential information must be shared early and widely.
- If the buyer can’t get financing, the deal may fall apart.
- Negotiations can become adversarial.
Problems with family succession:
- Next-generation interest or capability may be lacking.
- Family dynamics complicate decision-making.
- Estate and tax planning can become overwhelming.
The reality is that most owners don’t have a clear or viable plan in place—and that lack of clarity can delay retirement or lower the final sale price.
How Selling to Your Team Works
There are several ways to transition ownership to employees. These include:
- ESOPs (Employee Stock Ownership Plans): Popular but costly and complex. Best for companies with $1.5M+ in EBITDA and 40+ employees.
- Employee Ownership Trusts (EOTs): A trust holds the shares for the benefit of employees. Great for mission-driven companies.
- Worker Cooperatives: Employees buy in and share profits democratically. Best for smaller values-aligned companies.
- Installment Sales: The seller is paid over time using company cash flow.
- SBA-Financed Buyouts + Seller Notes: Employees get up to 90% SBA financing, with the seller financing the rest.
At Allen Business Advisors, we specialize in the last model—where key employees can buy the business with as little as 10% down through SBA financing and a seller-held note. We call it the Step Up Legacy Plan™.
It offers owners liquidity at closing, avoids the red tape of an ESOP, and creates a personalized succession strategy that truly works.
Why This May Be the Best Retirement Plan of All
1. You Get Paid (And Usually Up Front)
When structured with SBA lending and seller financing, selling to your team doesn’t mean giving your business away. In fact, you can receive up to 90% of the sale price at closing, with interest income from the remainder.
You walk away with liquidity, peace of mind, and a continued connection to the company’s future—if you want it.
2. You Choose Your Timeline
Selling to your team allows for a gradual transition if desired. You can stay involved during the handoff, mentor your successors, and step away when the time is right.
This flexibility is rarely available in third-party sales.
3. You Empower the Next Generation
Your business is likely one of your greatest accomplishments. Why not use it to empower those who helped build it?
Employee ownership is a proven model for increasing retention, morale, and performance. When workers have skin in the game, they take greater pride and responsibility in the outcomes.
4. You Protect Your Legacy
It’s not just about the brand—it’s about your values, your leadership style, and the relationships you’ve cultivated over the years.
Selling to employees keeps the company local, stable, and rooted in your original vision. It honors the business you built while giving it room to grow.
5. You Avoid the Pitfalls of Other Exit Options
With third-party sales, you risk:
- Confidential leaks
- Buyer retrades and renegotiation
- Culture clash
- Staff layoffs
- Shuttered locations
With family succession, you risk:
- Conflict
- Financial strain
- Unprepared heirs
Selling to your team may not eliminate all risks, but it dramatically reduces the emotional and operational friction.
Case Study: The Quiet Power of an Internal Buyout
Take the example of a 20-year-old engineering firm with 18 employees. The founder was ready to retire but didn’t want to sell to a private equity firm. Instead, he worked with us to identify two senior team members who were ready to lead.
We structured a deal using:
- SBA 7(a) loan for 90% of the sale
- Seller note on standby for 10%
- Business valuation and coaching
The seller got paid. The buyers became owners. The company stayed intact. And today, the founder gets updates from a company he still feels proud of.
That’s what selling to your team can deliver.
FAQs: What Owners Ask Us Most
Do my employees need money to buy the business?
Not necessarily. With the Step-Up Legacy Plan, we structure financing so that employees require little to no down payment. SBA loans and seller notes fill the gap. However, the employees will need money for closing costs.
What if I don’t have a clear successor on the team?
We help identify, prepare, and coach potential buyers internally. If that’s not viable, we can explore hybrid options or help attract external leadership.
How long does the process take?
Typically 6–9 months, depending on your readiness, employee prep, and lender timelines.
Can I stay on after the sale?
Absolutely. You will be required to work for the new owner for one year. The number of hours per week tends to decrease over time.
Will I get fair market value?
Yes. We begin with a third-party valuation and build a deal around that number. Sellers often receive 100% of fair market value.
Start with a Conversation
Your retirement doesn’t have to mean the end of your company’s story. In fact, it can be the beginning of its best chapter yet.
If you’re curious whether selling to your team might work for you, we’d be honored to help. At Allen Business Advisors, we’ll walk you through your options and design a plan that works for you, your team, and your legacy.
Ready to explore the best retirement plan you didn’t know you had?
Schedule a consultation today.
Learn more about employee buyouts, SBA financing, and our Step Up Legacy Plan™ at allenbusinessadvisors.com.