Selling part of a business is four different transactions wearing one name: selling a division, selling a minority stake, selling a majority while staying on, or bringing in a partner. Each has a different buyer, a different price and a different set of documents.
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How to sell a portion of your business: a division or a product line
A carve out: assets, contracts, staff and sometimes premises are separated and sold. The work is in the separation, because shared systems, shared people and shared customers all have to be untangled. Buyers pay for a clean line, so a division that has never had its own accounts will be discounted until it does.
How to sell your share of a business: selling a stake
A minority stake in a private company is hard to sell to a stranger, because a minority holder cannot control distributions or an exit. The realistic buyers are existing shareholders, management, or a fund taking a structured position with protections written into a shareholders agreement. Expect a discount for lack of control and expect the agreement to matter more than the price.
Selling a majority and staying
The common private equity structure: the fund buys most of the equity, you roll over the rest and continue to run the business, with a second payday if the next sale goes well. It pays best of the four for most owners and it means having a board, a plan and a partner with views.
Other questions people ask
Can I sell 20% of my business?
To an existing shareholder or a manager, usually. To an outside investor, only with a shareholders agreement that gives them protections, and at a discount for lack of control.
Is a carve out worth doing?
Where the division has its own customers and can be given its own accounts, yes. Where it shares everything, the separation cost often exceeds the proceeds.
What is rollover equity?
The share of your proceeds reinvested in the buyer's new company. It is common in fund deals and it is a genuine second opportunity as well as a genuine risk.