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Building Your Business Worth with a Partial Sale

By Generational Equity

Partial Sale

“Partial sales are different. They can raise capital, incentivize employees or start ownership transitions.” – Investopedia

We have met thousands of business owners over the years, both in developing their optimal exit strategies and through our executive conferences. What these meetings make abundantly clear is that many do not understand what M&A can do for them and their companies. It is not simply about selling it to the highest bidder – our team Generational Equity goes far beyond that.

From building strategic partnerships with interested investors, to our Roadmap to Enhancing Value (REV), we help business owners achieve their ambitions in several meaningful ways – not just exit for the optimal price.

That leads onto the topic of this piece: the partial sale of your business. Perhaps you aren’t interested in selling 100% of your company. Fortunately, selling does not need to have an ‘all-or-nothing’ approach. Partial sales have grown in popularity in the middle market as a way to fund overall business growth.

For example, a few years ago we helped create a partial sale structure for the owners of Orbis Logistics, allowing them to retain partial ownership and participate in the future growth of the company by partnering with a platform company funded by a private equity firm.  This approach can prove beneficial to company owners lacking the capital to pursue their ambitions in any sector, whether you choose to sell a company asset or a percentage of the business as a whole.

Why Would You Consider a Partial Sale?

The real benefit of a partial sale is this gives you the capital to grow your business to the level you want to be at. In this situation, an M&A advisory firm would identify buyers that are interested in partnering with you and retain you post-acquisition in a minority ownership role. Once this investor has been located, it will be a case of determining the right deal structure that both parties are happy with, from determining what roles you will take in the company’s direction to the incentives on both sides.

With the right advice and guidance, such as what you’d receive from our skilled dealmakers at Generational Equity, a partial sale can be the perfect win-win scenario. You receive the financial backing you need to expand your business, and the investor can reap the benefits of this growth.

Pros and Cons of a Partial Sale

“Owning a business is very stressful, and that is largely due to the fact we want to be successful. But now we have a lot more financial capital behind us that puts a lot of that stress at ease. Not only for me personally, but our employees also – we have the opportunity to grow internally and through other companies.” – Brad Hennrich, Post Transaction Benefits of a Partial Sale

Of course, with every deal structure, there are several positives and negatives compared to other options. As previously mentioned, if you find the right buyer and approach the right team to construct your deal, these strategic partnerships can be a big boost for your company.

Potential benefits include:

  • Additional resources for the business while maintaining partial ownership
  • Keeping a substantial influence in company operations and directing growth
  • You can get a ‘second bite of the apple’ when the new entity is sold or taken public a few years down the road
  • Chance to gain insight and support from partners that are experts in your field
  • May reduce financial and emotional stress

However, there can be drawbacks if your deal isn’t structured correctly, particularly post-acquisition. You will likely transition from being the sole decision-maker in your business to working alongside other owners. How successful this change will be depends on your personality and approach to your business – if you feel you would be uncomfortable working with others, a partial sale might not work for you.

As part of Generational Equity’s process, our advisors will have several frank conversations about your goals, preferences and requirements to help find the right buyer and setup the right structure. There are many options available to you, and we make it our aim to find the ideal one for you.

Deciding on Your Deal Structure

If you are one of the many entrepreneurs in need of capital to fund business growth, a partial sale might be the perfect plan of action. Why not discuss this at one of our executive conferences? These are completely complimentary, and are held regularly across North America. Here, you will not only get a comprehensive guide to the M&A process and advice on building the optimal exit strategy, but the opportunity to discuss your company goals with our experienced team.

These talks will give you a clearer idea about how to fulfil these ambitions, be it through a partial sale, a strategic partnership, a capital infusion or simply exiting your business outright. In just a few short hours, our executive conferences will give you a clearer picture of the future of your business.

Contact our team at Generational Equity today at 972-232-1121 for more information on when we are next in your area.

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Success, you have been added to our list.

Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward. P.S. Given my experience with GE I felt comfortable enough to sign up with Generation Wealth Advisors!
Tom Currier, Former President & CEO, Rackmount Solutions
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
Betty L. Brennan, President, Taylor Studios
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.
Caroline Connelly, CEO, OptoTest
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.
JoAnn Ellis, Owner of Fondren 5 Star Kennels
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!
Eric Erlandson, Owner, Action Fastenings, Inc.
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.
Pete L.
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!
JoAnn Ellis, Owner of Fondren 5 Star Kennels
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.
Bryan D. Horn, Owner, Over Under Clothing
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.
Salvo Stoch, Founder and CEO of Sleeping Partners
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.
Rick Greene of Dobbs Equity Partners LLC
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.
Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.
Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.
Shane and Johanna Kline, Owners of Vision Upfitters
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.
Robert Evans, President and CEO of Mealtracker Dietary Software
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.