Teamshares acquisition process and criteria

Teamshares is one of America's largest buyers of small businesses from retiring owners, with a 90% close rate on signed LOIs. Even still, we only sign an LOI for 1% of the businesses we review. Learn about the Teamshares transaction process and criteria that ensures the small businesses we buy never have to be sold again.
transaction team sitting at a desk on laptops evaluating acquisition criteria for small business

Teamshares is one of America’s largest and most reliable buyers of small businesses from retiring owners. Our vision is to buy 10,000 small businesses across the country and make them 80% employee-owned within 20 years.

Since our inception in 2019, our skilled team has purchased more than 80 small businesses across 29 states and 40+ industries, with a 90% Letter of Intent (LOI) close rate.

Why retiring owners? Why small businesses?

Small business succession planning is often complicated, and many business owners close their doors upon retirement, leaving employees without a job and a hole in the local community.

Teamshares’ goal is to build on the legacy of retiring owners and transfer wealth to hard working employees through employee ownership. Our vision of making 10,000 small businesses employee-owned informs everything that we do.

Even though we’re one of the largest buyers of retirement sales in America, we examine thousands of businesses a year and only sign an LOI for 1% of the businesses we review. Because we’re transitioning these companies to employee ownership, we only pursue those that never have to be sold again, as determined by our unique set of criteria.

This article provides insight into our transaction process and criteria so that we can better serve business owners and brokers in the future. 

Are you a broker or business owner that needs an exit plan to keep your company and employees in place?

Employee ownership is the future of small business

Small business sales are hard, emotional, and personal. We’re here to help retiring small business owners transition into the next chapter with confidence.

Approximately 4.5M small businesses, representing more than $10 trillion in value, will face owner retirement in the next ~10 years. Of these businesses, 80% will fail to sell, forcing them to close. 

We’re here to reverse this trend. 

Since our inception in 2019, we’ve purchased more than 75 businesses across the U.S. in various industries. The vast majority of these business owners say they are proud to have sold to Teamshares. 

More than 1,600 employees have become owners and received equity in the businesses they worked so hard to build and grow. 

Teamshares will help a network of 10,000 small businesses become employee-owned, creating $10 billion of stock wealth for hard-working Americans while supporting a generation of business owners through confident retirement. 

“If I had two offers for the same amount and only one offered employee ownership, I would definitely choose employee ownership.”

What we’re doing is new and enables small businesses owners to make a profound impact on their communities.

Why our differentiated transaction process works

We have a singular mission and a unique, streamlined process to achieve it.

Teamshares isn’t a typical buyer. We aren’t an individual operator and we aren’t private equity. Because of our model of employee ownership, when Teamshares purchases a business from a retiring owner, the business never has to be sold again.

Teamshares has committed capital in place and doesn’t use outside investors to fund individual purchases. As such, we have no financing contingencies, which allows us to move independently, quickly, and efficiently.

We believe the most local buyer—your employees—is the right one. And our framework makes this a reality, helping employees to eventually own over 80% of the small businesses they have worked so hard for.

Teamshares’ transaction team is a diverse group of professionals with decades of experience. Our in-house acquisition, real estate, legal, and financial diligence teams have developed streamlined processes that allow us move quickly and efficiently.

“I’ve never worked with a buyer that was so organized and made the process so simple.”

This team puts each aspect of the potential business through an extensive series of carefully developed quantitative and qualitative assessments. We strive to be comprehensive, prompt, and fair in our evaluations.

Our offer terms vary so we can be an active and reliable succession plan for retiring owners, regardless of the economy or market trends. We use standard, easy-to-understand documents drafted by our in-house legal team that are fair to both parties.

The typical transaction process is as follows:

  1. Receive Confidential Information Memorandums (CIMS)/financials to perform preliminary valuation
  2. Conduct owner meeting
  3. Validate financials with tax returns
  4. Submit offer or LOI

After an LOI is signed, we can close in as little as 90 days. Brokers and sellers appreciate our easy-to-understand process and quick turnaround and we are always happy to put prospective sellers in touch with our former owners.

“We enjoyed working with you and found everyone very pleasant to deal with. I don’t say that lightly. True goodwill is an all too scarce commodity.”

Given the number of businesses we look through a year, we adhere to strict evaluation criteria to ensure the future success of the company and its employee owners. 

Transaction criteria

We look for small businesses that will never have to close their doors or be sold again. That’s the only way for us to honor our mission and help more Americans become employee owners.

In our experience, there are many criteria across geography, industry, sale reason, number of owners, and available real estate that companies must meet to be in this position.

Teamshares transaction criteria
GeographyU.S.-based businesses.
IndustryLargely agnostic—we own businesses in 40+ industries (food and beverage, building materials, HVAC, auto, retail, and many more).
The owner is of true retirement age, 50 or older, and leaving the industry.
Steady owner earningsGenerally, Seller Discretionary Earnings (EBITDA plus owner compensation) of $400K to $2M in two of the last three years, tax return provable. We consider restaurant SDEs as low as $250K.
OwnershipOur preference is to work with one to two retiring owners (we will consider more on a case-by-case basis).
Real estateWe consider both multi-year leases and real estate purchases on a case-by-case basis.

By adhering to strict transaction criteria, we can ensure the businesses we buy never have to be sold again.

Know a small business that may be a fit for Teamshares?

So, a business fit our criteria and we didn’t submit an LOI. What happened?

Reasons we may not submit an LOI

Due to our specific needs, we’re often forced to pass on great businesses. In order to purchase 80+ businesses this past year, we reviewed over 3,000 CIMs.

Our structure requires including certain expense items, such as the replacement president, that other buyers may not have to factor in. Those requirements sometimes result in us passing on an opportunity or offering a lower price than an individual buyer who benefits from things like a president salary.

Here are some common reasons a small business may not be a fit for Teamshares:

  • Too owner dependent: The business owner is performing multiple functions, such as sales, bookkeeping, etc., that require multiple replacements.
  • Too capital expenditure heavy: The business requires a large investment in equipment, creating underwriting difficulty.
  • Multiple family members in the business: Multiple family members are working in the business, complicating the transaction.
  • Special statuses (e.g., Woman Owned Business, Veteran Owned Business, etc.): As the new owner, we can’t claim special statuses.
  • Location: The business location makes finding a new, high quality president difficult.
  • Financials that aren’t tax return provable: We strictly underwrite to tax returns.
  • High customer/vendor concentration: When a company has a high vendor or customer concentration, there is more transition risk.

Teamshares is on its way to creating $10 billion of new wealth for Americans. Our goal is to add 100 more businesses to our network this year. If you’re a broker or a selling owner, find out if Teamshares is your buyer of choice.

Teamshares writers follow strict principles for sourcing credible information within articles. Any outside information including direct quotes, paraphrased information, and concepts that are derived from external sources adhere to our standards for accuracy and transparency.

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