Transfer Options

Family Members (FBO)

Owners may want to transfer or sell their company to family members. This is sometimes called a Family Buyout (FBO). Family members often do not have sufficient cash to buy the business and they often do an “earnout” with a note payable to the seller. Payments on this note may cause future cash flow problems for the company. Key relationships may be impacted with this type of transaction, such as bankers, customers, vendors, professionals, etc.

Management (MBO)

A company’s key management may become the company’s buyer, often called a Management Buyout (MBO). Management usually does not have the cash to purchase a company. The seller often creates a note payable secured by company stock. The Adjusted EBITDA may be 5X-7X. The seller also runs the risk of not being able to “get away emotionally” from the company during the time the principle and interest payments are made on the note.