The Small Business Buyer You Overlooked

While the media hypes IPOs, venture capital deals and private equity investments, many small business owners have much smaller exit ambitions.

Indeed, plenty of entrepreneurs at some point hope to sell their companies at a tidy profit to create a healthy nest egg. So who are the potential buyers?

Of course, local rivals come to mind. As do regional players that may want to buy your business for a geographic or vertical market play. But don't overlook another potential suitor -- your own employees.

Indeed, 20 percent of small business company sales now involve existing employees snapping up the company, according to TulsaWorld. Some of the deals, I suspect, involve Employee Stock Ownership Plans (ESOP). Roughly 7,000 businesses covering 13.5 million employees now have ESOP plans, according to the National Center for Employee Ownership.

I suspect that figure will continue to rise as more Baby Boomers (born around 1945 to 1964) consider exit plans for their businesses. Many older boomers want -- and need -- to keep working for financial reasons. But they also want to unlock money tied up in their own businesses. An ESOP that gradually transitions ownership from the Boomer to the employees could be one way to handle that transition. 

What are some other options? Let me noodle that a bit and get back to you...

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