A. When and how I want. 

It is this desire for flexibility and control that makes Employee Stock Ownership Plans (ESOPs) a good succession strategy for many business owners.  In fact, most ESOPs own only a portion of the company for a variety of reasons:  

The owner's goal is diversification. 

The driving force behind an ESOP may be the owner's desire to diversify his or her portfolio.  An ESOP can help owners create  liquidity from assets that had been tied up in the business. Owners   can use the proceeds to make alternate investments.  This strategy allows them to access some of the capital in their business while maintaining control.

Some of the owners want to sell and others do not. 

When there is more than one owner, circumstances often change.  For example, three friends start a company.  After a period of time one of them wants to do something different and sell his interest in the company.  An ESOP can be used to buy out the selling owner without requiring the other two owners to come up with additional capital or find an additional investor. 

This is a common situation among family owned companies.  Over time,   multiple family members may have   an ownership interest in the company.  Some   family members may not be active in the business and may not even live in the same area.  Often times they would prefer to liquidate their ownership position.  An ESOP can be an effective approach. 

The owner wants a phased exit over a period of several years.                                                  

A business owner may wish to sell his or her company over time as opposed to selling in a single transaction.  This phased approach may be needed to accommodate to life style issues or tax management. 

An owner may be looking to gradually exit the business over a period of time.  As a result, they may want to sell a portion now, and then more in the future, setting the timeline according to how much time they want to spend working and when they hope to retire altogether.     For example, at age 62  an owner looking for a phased retirement may decide to sell a minority interest to an ESOP over a period of seven years.  During those seven years he or she remains active but gradually reduces the hours at work.  At the end of the seven years the owner sells the remainder of the company to the ESOP. 

Alternately, the owner may be actively managing his or her personal income tax situation and prefers to receive the proceeds on the sale of the business in more than one transaction. Spreading the sale out   allows them to decide when   they have capital gains tax liability. 

The owner can't find a buyer or financing to complete the sale.     For a variety of reasons, a business owner may not be able to find a buyer or obtain enough financing to sell all of the business.  However, the owner may be able to get partial financing. Through an ESOP, the owner can use a structured sale to sell part of the company.    Once the initial transaction is complete, the owner has the option of   a second stage transaction to sell more of the company to the ESOP. 

Q. What is the best way to sell my company?

A. For many business owners it may be an ESOP.