Fair Transaction Pricing:
Determines a transparent and fair market value, ensuring employees purchase the business at a justifiable price.
Legal and Regulatory Compliance:
Addresses legal and regulatory requirements, preventing potential legal complications.
Tax Implications:
Helps in understanding and planning for tax consequences for both the selling owner and employees.
Employee Motivation:
Provides a clear picture of the financial stake employees are taking in the business, motivating active participation.
Documentation and Record-Keeping:
Creates a transparent record for future reference, internal decision-making, and audit purposes.
Employee Buy-In:
Builds confidence and trust among employees by demonstrating the fairness of the transaction.
Financing and Funding:
Required by lenders to ensure the business has sufficient value for collateral in employee financing.
Negotiation Basis:
Serves as a starting point for negotiations on transaction terms, including payment structures.
Due Diligence:
Part of the due diligence process, identifying and addressing potential risks or issues before finalising the transaction.
