When you launch your own business, the last thing on your mind is how to exit. But eventually, the time will come when you want to sell your company to either retire or move on to other opportunities. When that time came for me, I opted to sell my company not to outsiders, but to key employees within my organization. Nine years ago, I received a blind email from a management consultant specializing in exit and succession planning. What got my attention was his mention of an employee-based buyout plan. That sounded very attractive to me; I could create long-term wealth for myself, give key team members an opportunity for ownership, and ensure that the company’s legacy would live on. I began by promoting two key employees, Colby Walton and Jason Meyer, to full partners. They started assuming more responsibility in running the company, and I reduced my active involvement. On Dec. 31, 2021, Walton and Meyer became the full owners of Cooksey Communications, and I stepped away. Having successfully been through the process, here’s some advice for business owners who are interested in pursuing a similar path.
- Hire a good consultant. Finding someone with experience in employee buyouts and succession plans and who specializes in your industry is the most important step. Designing a solid plan that protects everyone’s interests is critical; the consultant can act as a mediator between you and your employees in cases of disagreements. Also, be sure your attorney and CPA are involved in all phases of discussions.
- Start several years in advance. Identify key employees who may want to buy the company and talk to them about their goals and interests in ownership. This isn’t a small ask. Just because someone is a great employee doesn’t mean they want to take on the responsibility of ownership. They need to be committed to the long-term success of the company. It also takes time to build up equity that will help with the buyout. And it gives you and the entire company time to adjust to the eventual change. Leading up to execution, review the succession plan at least once per year.
- When it’s time, get out of the way. Let your key employees begin assuming more responsibility over time and start stepping back a bit. This will help with customer retention and protect the company’s culture. In our case, by the time I sold my firm, my two partners were already running the day-to-day operations. When you get to the deadline written into your plan, you and your key employees will be ready for the transition. Let them fly and be their own bosses, knowing that you have trained them well.
Gail Cooksey founded Irving-based Cooksey Communications in 1994 and sold it last December.