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Having an associate buy into a company is often one of the most rewarding moments of the selling owner’s career. The Associate buy-in can take many forms, but one method we have advised and highly recommend is a staggered purchase of the following:

Initial buy-in of 25% ownership
2nd buy-in at a later, predetermined date of additional 24% ownership
Final buy-in at a later, predetermined date of remaining 51% ownership

Benefits to the selling owner:

• Allows for a slower transition out of the business
• Provides for a defined succession plan
• Spreads the tax impact of sale over multiple years

Benefits to the associate:

• Gives the associate time to adjust to the new position of owner
• Gives the associate time to build his/her personal net worth and liquidity
• Allows the associate time to work with the owner in an ownership roll, keeping the company’s message unified

Benefits to the company:

• Keeps the entire team in place throughout the transition
• Avoids drastic, sweeping changes
• Does not alarm any of the clientele who are used to direct interaction with the selling owner