Founders often hear first from entrepreneurs, competitors, and funds. Three other routes are open to you. Our guide to the six types of buyers introduces them in one paragraph.
Each section answers four questions to put to any buyer: whose money it is, how long they plan to own, who runs the company the morning after closing, and how you are paid. Our editorial Ask whose money it is before you ask what the number is explains why the first comes first.
A family office manages a wealthy family's investments. A holding company is a company whose business is owning other companies. Both usually buy with their own capital and often keep what they buy for many years. They suit a founder who wants a patient owner.
Whose money. The money is the family's or the parent company's own capital. Some owners also bring in outside investors or a lender, so ask whether the owner's money is the only money.
How long they plan to own. Often for many years, because no fund term (a fund's deadline to sell) forces a sale. A family's plans can change with a new generation, so ask for the plan in years.
Who runs the company after closing. Usually your management team stays and the owner sits on the board. A holding company that owns related businesses may combine some functions.
How you are paid. Cash at closing is the simplest form. Part of the price may come as a seller note (a loan you make to the buyer) or as rollover equity, a share of the company you keep.
Real strength. A family office or holding company can wait, which helps a company that does not match a fund's size or timetable.
Real weak point. Experience varies, so ask whether the owner has bought many companies before or is buying for the first time.
Who it suits. A founder who wants a long-term owner and a small group of decision makers to deal with.
Questions to ask
A management buyout sells the company to the executives who already run it. They know the customers and the systems from the inside. Managers seldom have enough savings to pay the full price, so the money usually comes from several places.
Whose money. The money comes from the managers' savings, plus a bank loan, a note from you, or an investor who backs the team with equity, money paid for a share of ownership.
How long they plan to own. Managers financed by a bank and a seller note often plan to hold for years. An investor behind them will have its own timeline.
Who runs the company after closing. The managers keep running it, so customers and employees see little change. You step back, usually after a transition period.
How you are paid. Part of the price may come as a seller note, repaid from the company's cash flow after the sale. An earnout, a payment that depends on how the company performs, can bridge a gap between your price and what the managers can pay at closing.
Real strength. Your managers already know the business, and fewer outsiders need to study your records.
Real weak point. You negotiate with people who work for you, and a sale to them usually has no competing bidder, so ask an independent adviser what the company is worth. If you carry a note, your repayment depends on how the company performs after you leave.
Who it suits. A founder with a leadership team that wants to own the company and can win a lender's confidence.
Questions to ask
An employee stock ownership plan, or ESOP, is a retirement plan that invests primarily in the stock of the employer. A trust, run by a trustee, holds the shares for the employees. The company pays for them, often with borrowed money, and you can sell all or part of the company.
Whose money. The company supplies it. The National Center for Employee Ownership (NCEO) says the company uses future profits to buy the shares for its employees. In a common version, called a leveraged ESOP, the ESOP borrows to buy your shares and the company repays the loan over time.
How long they plan to own. An ESOP has no fund term. The trust holds the shares for employees, and the company buys each person's shares back when they retire or leave.
Who runs the company after closing. Your managers usually keep running it. The Department of Labor says the trust is the legal shareholder and its trustee generally votes the shares. The NCEO says trustees almost never get involved in operations, so a team must be ready to run the company after you leave.
How you are paid. The price cannot exceed fair market value, which an outside valuation sets. Federal tax law lets some sellers defer tax on the gain by reinvesting the proceeds in stocks and bonds of U.S. operating companies. The full deferral applies only when the company is or becomes a C corporation, one that pays tax on its own profits, and the ESOP owns at least 30% afterward (26 U.S.C. § 1042). Confirm ESOP tax and legal rules with your own attorney and accountant.
Real strength. The company stays independent and its people become owners. The NCEO counts 6,411 companies with an ESOP, based on 2023 filings.
Real weak point. The price cannot exceed fair market value, so a buyer who expects savings from combining companies may pay more. The company often takes on debt and has a duty to buy back shares as employees retire. The deal needs an outside appraiser and should include an independent trustee.
Who it suits. A founder who wants the company to stay independent and has leaders ready to run it.
Questions to ask
HarborWind is a buyer. We acquire, transform, and hold founder-led businesses, preserving legacies while compounding value. We are long-term holders with no fund timeline. Our range is $2M–$8M in EBITDA, a measure of annual operating profit, in niche manufacturing, specialty chemicals, and industrial and essential B2B services. We line up equity and debt before we sign a letter of intent, the short document that sets out price and terms, and two principals make every decision. Read how we work with business owners. A first conversation is confidential, unhurried, and without obligation.
A private equity fund raises money from outside investors first and sells each company before the fund's term ends. A family office invests a family's own capital and has no fund term, so it can hold a company for many years.
Yes. An ESOP can own part or all of a company. A family office or holding company may buy a majority and leave you a stake, and a management buyout can happen in stages. Ask each buyer what role you would keep.
The ESOP trust is the legal shareholder and holds the shares for the employees. They are paid cash for the value of their shares after they retire or leave. A trustee generally votes the shares, and your management team usually keeps running daily operations.
They usually put in some savings, and the rest comes from a bank loan, a note from you, an investor who backs them, or a mix. Ask for written commitments from each lender and investor before you agree to a price.
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