Transfer of business

Know of a situation where a friend is waiting for some dialogue to start about succession in a business. Person running this business is sensitive to any conversation on this but it is his desire to have my friend wind up with it.
Don't need mathematical analysis but need a way to get discussion going. Nothing will be gifted but my friend has to phase in gradually to be able to do this.
Looking for ideas and examples. Time is of the essence.

The current owner needs to have some exotic vacation brochures slipped into his mailbox.

There have been a few here where the owner has stayed on with the company after selling to new owner to make the transition easier.

Most did not even know that the new owner had bought until a year or two later.

I'm not sure this is exactly what you are asking but one of my Wifes Uncles sold his parts business to a long time employee on the pay as you profit plan. The buyer ran the business and paid the seller each month according to what he could afford from the profits, they had a pre-agreed total price of course, and a legal agreement. I assume the buyer paid it off as quick as he could as he is a conservative type guy and never really changed his lifestyle. I do know that the business was, and is, a substantial national franchise business that the buyer probably never would have been able to finance through conventional channels.

I have been going through this for a number of years. I have been looking for a business to but for 5 years an have found one that makes sense. What I have done is to get some financial help to assist in determining the value of the business. This is actually a key step because the owner often wants more than it's worth. You have to keep in mind that no matter how attractive a business is and how much someone wants it, it has to make financial sense. Otherwise you will be belly up in short order.

Today, it's almost impossible to get conventional financing on any business. The best way to get a business financed is to somehow get the owner to hold the note. This can be pretty emotional but it can be done.

The only way to begin the process would be for your friend to sit down with the owner and tell him that he wants to take the operation over. This isn't always as easy as it seems but it is truly the best way to begin. Gives a chance to look each other in the eye and probe the all important issue of trust. If the session goes well you should ask for permission to look at financials. This would be a great time to offer to execute a non-disclosure agreement. The owner's attorney can do that or your friend should see if he can get one developed.

There should be a clear understandiung in you friend's mind that this is a VERY difficult thing to do. What he is likely doing is asking to take over the owner's child.

I have been working on the owner of our company for 2.5 years and haven't gotten there yet.

This is a long and painful process that has to be done delicately and with compassion for the owner and his/her family.

5 years ago my wife and I agreed to buy the family retail store. My father-in-law built the store up rom scratch over 30 years. It is his baby! The financial end actually went pretty smooth. Had an inventory done to agree on price. He is carrying the contract. The biggest issue we have had is that my father-in-law won't let go. He works for us now and has a hard time remembering that it his daughtwers business some times. They butt heads sometimes over the operation of the store. Be prepared for it to be a long process before it is really your business!

My wife bought her business from her old boss. She worked for her for 2 years, then the owner got sick, and my wife ran the business for a year, when the owner recovered, she wanted to sell the biz, she was willing to finance it. This was in 1991. I went to 2 local banks, nobody would even talk about financing it. Basically, if the owner won't finance it, nobody else will. We worked out a 5 year plan. You need a lawyer to draft a simple agreement. We are still friends with the old owner. As far as price, it's tough. Real estate is the first thing, easiest to price. Equipment is harder. Goodwill, that stream of customers coming in the door, is the toughest. But realize that being the boss gives ya a lot of headaches, too.