I know, based on the calls and emails I receive every day, several of these “Boomers” own payday, car title and installment loan businesses they want to sell.
Why sell? Retirement, divorce, tired, start another business, personal need for cash, partnership problems, key employee quit, want to move to Texas/Florida/Arizona…
And what’s the #1 problem I see when I evaluate one of these “consumer loan businesses?”
The seller has failed to prepare their consumer lending business to be sold! You can’t just wake up one morning and decide to sell your payday loan business, your car title loan store, your consumer lending company…
So, what to do? A concrete step a seller can do today?
Make the decision today that you want/need to prepare your business to be sold 2 years from today. [Even, if it’s unlikely you WILL want to sell, your goal must be to PREPARE your business for sale!]
Don’t ever issue equity to retain your key employees!
It makes a sale of your business too complicated! Use a “Stay Bonus.” A “Stay Bonus” is a cash reward paid to your key employee(s) as a reward for staying with your consumer loan business through the sales transition to the new buyer.
Often, the buyer needs somebody who knows the business, the customers, the loan management system… and can keep the business running after the seller departs.
I’ve been involved in the purchase and sale of a LOT of payday loan & consumer lending businesses over the years.
Many of these businesses are purchased by absentee owners. OFTEN, they absolutely insist the seller’s key employee(s) must remain after their purchase.
So… how does the seller guarantee this will happen?
Basically, as you prepare your consumer loan business for sale down the road, you create a long-term cash reward program for your key employee(s).
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