Mechanisms should be considered to promote the purchase by young associates who typically do not have a lot of cash. Usually firms use bonuses, apply salary increases, and sometimes bank loans to accomplish the transfer, so in effect, the firm funds the buyout through its profitability. Payroll deductions from the buyers’ salaries over a period of years can ease the burden as well. But to make the process “real,” prospective owners should always contribute some cash to the buyout so that their own investment is at stake.
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