David Jasmund

E: djasmund@pcecompanies.com

Follow me: LinkedIn

Every business owner considering the sale of the business should learn from the little girl in the 19th-century fairy tale, "Goldilocks and the Three Bears." As you recall, she tested all three of the Bear Family’s porridge, chairs and beds and never settled for any of the early options. Much like Goldilocks, you may have many options available when considering how best to exit your business.

Usually, business owners view their succession option as selling to an external buyer or perhaps someone familiar with the business, an internal buyer. External or third-party buyers are strategic or financial buyers. Internal buyers might be your current managers working together to pull off an MBO (management buyout) or your employees purchasing your company under a program created by Congress called an employee stock ownership plan, or ESOP.

You’ve no doubt heard, or even know, disappointed business owners who sold to the first party that made an offer and later regretted their decision. They spent zero time exploring alternatives. More problematic is the fact that their professional advisors failed to help them understand the myriad options available. Lofty plans were shelved. Money was left on the table. And dreams of long-term independence were even crushed.

Sell Your Business Using the Dual-Track Process

PCE Investment Banker’s first dual-track client engagement successfully closed nearly two decades ago. The dual-track process allows you the ability to market your business to multiple third-party buyers while at the same time evaluating the sale of the business to an ESOP. PCE manages both processes — the sell-side auction process and the ESOP process — under one engagement. As the strategy unfolds, you can compare both possible outcomes at once and make the best choice. You end up with peace of mind knowing that you achieved the best outcome possible.

One of PCE’s early dual-track sale engagements led to increased interest by a private equity group as well as two strategic buyers. The process involved a close look at the tax advantages of going with the ESOP option. Armed with this data, the sellers convinced the external buyer to raise their offer. In the end, the sellers sold 51% of their shares to the ESOP at a value that netted after-tax proceeds equal to 90% of what the strategic buyer initially offered for the entire company. Several years later, they sold the remaining 49% to the ESOP, netting a substantial premium over external third-party offers.

Compare Exit Strategies Before Selling Your Business

Today’s robust M&A market has the dual-track process becoming a three-track process. Financial buyers, including private equity groups, family offices and wealthy individuals, have become active buyers of businesses such that you can be just like Goldilocks, testing and contrasting the sale not only to an ESOP but also to both types of third-party buyers: strategic buyers and financial buyers.

All three exit scenarios provide benefits and challenges. It’s worth examining the pros and cons of each exit process.

  ESOP Financial Buyer Strategic Buyer
Transaction Pricing "Fair Market Value" "Fair Market Value" Premium for synergies likely and market growth
Owner Exit at Sale 

Limited ability — depends on strength of management

Limited ability to retire or reduce role within company

Fastest retirement strategy

Negotiable — typically 1 year

Liquidity at Closing

Constrained by access to bank debt determined by company’s cash flow

Partial reinvestment of sale proceeds (rollover) typical

Substantially all

Transaction Structure

Stock sale only

Asset sale typical

Asset sale typical

Taxes on Proceeds

Capital gains are eliminated / deferred completely

Blend of ordinary income and capital gains

Blend of ordinary income and capital gains

Post-Sale Operational Changes

Limited, day-to-day or none

Limited, day-to-day, significant changes on major business decisions

Post-acquisition consolidation and operational changes

Seller’s Role Post-Sale

Actively involved – dependent on strength of management

Actively involved, continual focus on business growth and development

Usually limited for short duration, then full exit from business operations

Transaction Timeline

< 6 months

4 – 8 months

6 – 12 months

Access to Seller’s Confidential Information


Limited risk, as the buyer is not a competitor

Risk of competitors learning about your strategic advantage

Mitigated by non-disclosure agreement


We believe you need to understand all your liquidity options thoroughly, and the dual-track engagement eliminates the chance of an uninformed decision. The dual-track strategy is a winning combination that can lead a strategic or financial buyer to more favorable terms and a higher price or increased values and after-tax proceeds for an ESOP scenario — or both!

Visit our Exit Planning Library to find additional resources to guide you through the exit planning process.


David Jasmund


David Jasmund, Shareholder

Investment Banking


Orlando Office

407-621-2100 (main)

407-621-2111 (direct)

407-621-2199 (fax)

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
David Jasmund


David Jasmund

Investment Banking | ESOP

Orlando Office

407-621-2111 (direct)


407-621-2111 (direct)

407-621-2199 (fax)