Manage-to-Own is an approach to buying a business that allows a person to “earn their way” into business ownership.
Here’s one example of how it works …
- Instead of paying the current owner in cash, the buyer agrees to work in the business for a reduced compensation. This can be a salary, hourly rate, commission rate, or any other mutually agreeable option.
- In exchange for the reduced compensation, the owner agrees to credit the buyer with some multiple of the forfeited income. (for example, if the expected salary is $1000 per week, the arrangement might pay the buyer $700 per week, and credit the buyer $500 per week towards the purchase of the business.)
- An option vesting schedule is then used to determine how much of the company is available to the buyer, and when.
- Once the buyer has some vesting in the business, they will be in a much better position to complete the purchase through traditional purchase methods (Seller financing, SBA Loans, Micro Loans, etc.).
To learn more about the Manage-to-Own process, please Contact Jay.