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Guide: Exit Your Business | Strategy Six

Lease to own

Similar to the flexibility that comes from selling to a co-owner, a lease to own agreement may be the best option for you when selling your business. If a potential buyer does not have the means to outright purchase the business, a lease to own agreement could put this plan into motion. 

In this type of arrangement, the buyer (lessee) would be able to rapidly grow their current operations, use your business name (lessor) in securing new assets such as equipment, facilities, and new employees - all without having to put down a massive sum of capital to outright buy your share(s) of the business. 

Keep in mind that this type of transfer takes time and doesn’t mean you are 100% out of the business… at least right away. Until the final payment is made, the lessee (or buyer) is still in debt to you, and you or your legal representative may have to have regular communication with them to make sure all is going according to plan.

Frequently Asked Questions

Do you have questions about exiting your business? You should consider checking out our Resource Navigator. It houses the contact information of 400 of our most helpful partners from across the state who provide free to low-cost assistance to Iowa entrepreneurs and small business owners.

Q: What is a lease to own exit strategy?

A: A lease to own exit strategy allows you to set up a payment plan with someone who wants to take over your business. This is primarily used when the buyer cannot afford to buy you out at the start, but will do so over time.

Q: If I offer a lease to own plan with a buyer, am I responsible for the business anymore?

A: The majority of decisions will be off your plate as the new owner will be in the driver's seat. However, there may be things that come up from time to time they may ask you about or need your “sign off” on according to your agreement.

Q: How long does it take for a lease to own agreement to mature?

A: This depends entirely on the agreement that you and the buyer come to.

 

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NOTICE: The information included on this website is to be used only as a guide. It is not intended to cover all provisions of the law or every taxpayer's specific circumstances.

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