Possible Employee Buyout

LittleMissBride

Apologies in advance if I have not posted this in the correct forum.

My husband and I are looking for some advice, I will try to be brief.
My husband has worked for a small company (consisting of 3 men in total, father, son and my husband) for the past 5 years. Over this time he has built great working relationships with customers/contracts. The owner of the business is considering selling to retire and we are considering buying/taking over the business because it is a job that my husband enjoys.
The problem here is, we have never owned a business so are scared to take the first leap and financially we are not wealthy people with little savings to contribute towards a buyout.
I would love to hear from anyone who has experience in employee buyouts or could point us in the right direction as to how to go about it. We would like to build a plan to approach the owner with an option when he decides to retire.
Thanking you in advance,

Kerry

InsideInsurance

What is the sons view of it all and their plan? This would be one of my concerns.

Most people start doing their retirement planning at least a couple of years ahead unless there is a sudden change in health etc. How much time is there? Is there scope for him to semi-retire first and handover some more of the duties to your husband?

If Dad retires, son also presumably leaves, what are you actually buying? What does his contract of employment say about non-compete clauses? Could he set up a rival business once the old boy retires or would setup costs be high?

I have been involved in MBOs before and there are many questions that need considering before a clear way forward can emerge.

paddyrg

What is for sale exactly? Is he buying his own job, or are there company assets needed for daily operations? What would they cost second hand if setting up from scratch?

Businesses are frequently overvalued. If he feels it is good value to buy it out, the current owner can likely offer a staged purchase removing the need for finance per set.