How Many Ways Can I Sell My Company?

Q: “How many ways can I sell my company?”

A: These are the 5 ways that companies – or parts of companies – are most often sold:

Private Sale:

You sell your company to a family member, or to a competitor, or to someone else who would like to own your business. It's almost as easy as selling a house or a car.

Growth Equity:

You receive an infusion of cash in return for a minority stake in your company. You still call the shots, but you now have a partner who will receive a percentage of your profits and a percentage of the exit price of your company when you sell. A client of ours – you know his name – bought a company for 1 million dollars. A little more than 2 years after he hired us, he sold 30 percent of that company for 45 million dollars. The money he received was growth equity. But our friend still called the shots because he still owned controlling interest. Six years and 11 months after he hired us, he sold his company to private equity for 500 million dollars. We assume that the people who bought 30 percent of his company received 150 million dollars as a return on their investment of just 45 million, and that value growth happened in only 4 years. When your company is headed in the right direction, growth equity is always an option for you.

Private Equity:

You receive a price for your company, usually calculated as a multiple of your annual earnings, for selling controlling interest in your company to a group of investors. The investors are usually represented by a team of people who have been selected to invest – and manage – the funds that have been entrusted to them.

ESOP:

You borrow the total value of your company, exactly like most private equity groups will do the moment they own your company. But in this scenario, you pay the money to yourself and then give all the shares in your company to your employees. The company itself, not you, repays the loan. This is what happens in an Employee Stock Ownership Plan, the most misunderstood method of selling companies in America.

Ask any person, "What is an ESOP?" and they will almost certainly say, "That's when you sell your company to your employees." But your employees contribute no money, sign no loan documents, take no risk, and are given no control over your company. They don't "buy" your company, they simply earn shares in it. This is why an ESOP is always able to recruit and retain top talent because new employees earn shares in the company exactly like the original employees.

The government of the United States – with enthusiastic support from both political parties – recognizes an ESOP as a tax-qualified retirement plan. This is why every ESOP that is 100% owned by its employees is allowed to thrive and grow tax-free. That's right. An ESOP pays no state or federal taxes on its income.* This is why the trustees of an ESOP are able to fund aggressive expansion and pay you handsomely for your continuing guidance. Does it surprise you that the trustees of an ESOP are usually anxious to keep you, the builder of the company, involved in whatever capacity you would prefer?

* If the ESOP owns 100% of an S Corporation, then no federal or state income tax is due on the company's profits. This is because the ESOP itself is a tax-exempt entity. The employees pay taxes on their ESOP benefits only when they receive distributions from the ESOP, typically at retirement or when they leave the company. These distributions are generally taxed as ordinary income. However, employees can defer these taxes by rolling over their distribution into another qualified retirement account, such as an IRA or 401(k).

IPO:

You stand under the spout where the money gushes out when your company is part of an Initial Public Offering on the New York Stock Exchange.

But preparing your company for bundling into an IPO requires the same kind of time, energy, discipline and commitment that is required of a pilot who wants to learn how to fly a fighter jet. The great advantage of this level of training and preparation is that it gives you the ability to take your company to higher levels than you might otherwise have been able to take it.

But when you know how to fly a fighter jet, everything else on this page is like flying a Cessna in a blue sky on a Sunday afternoon.

© 2025, ExitReady, Inc.