Sean Kernan's Advice on How To Get Your Partners To Buy You Out

3 days ago
3 min read

Are you accidentally selling too cheap before negotiations even start? Identify the asset inside your business that’s worth more to someone else than it is to you.

About This Episode

When Sean Kernan wanted out of the financial advisor support business he co-founded in Dallas, he didn’t shop it to outside acquirers, and he didn’t wait for his five partners to make him an offer.

He engineered the buyout himself. Three and a half months from the first conversation to the wire hitting his account, $500,000 in cash, no earn-out, no holdback.

In this episode, you discover how to:

Open the conversation with your partners without triggering a defensive reaction or a stall.
Anchor your price to a prior valuation event so the number is hard to argue with.
Use a deliberately low ask as leverage to get speed, certainty, and 100% cash upfront.
Identify which one of your partners is most likely to write the check, and approach them first.
Source the cash from a platform partner, franchisor, or custodian who holds the underlying assets.
Negotiate a “ceasefire” non-compete that protects the buyers without trapping you.
Read inbound acquirer silence as market signal before you push the group toward a full sale.

Spot the partner who is too eager to buy, and what that eagerness usually means.

About Our Guest

Are you accidentally selling too cheap before negotiations even start? Identify the asset inside your business that’s worth more to someone else than it is to you.

Sean Kernan

Sean Kernan is the former partner of a Dallas-based firm that provided back-office support services to independent financial advisors, including compliance, payroll, and regulatory administration.

As one of six partners, Sean navigated the complex process of negotiating a partner buyout — ultimately structuring a successful exit from the company in late 2023.

On this episode of Built to Sell Radio, Sean shares the lessons he learned about valuation, partnership dynamics, and how to engineer an exit when your buyers are already sitting around the boardroom table.

Definition of Terms

Due-Diligence: This is a comprehensive appraisal of a business or investment undertaken before a merger, acquisition, or investment. It seeks to validate the information provided and uncover any potential risks or liabilities.

Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.

Roll Over Investor: A rollover investor, in the context of selling a business, refers to an individual or entity that rolls some of their proceeds from the sale with the buyer. This strategy allows the seller to defer capital gains taxes and potentially leverage their expertise or resources in a new venture.

Re-Trading: This occurs when a buyer attempts to renegotiate the purchase price of a deal after initially agreeing to one. It is often seen unfavorably as it occurs after due diligence, seemingly exploiting newly discovered information.

TAM: “Total Addressable Market.” It’s a business term that represents the overall revenue opportunity available for a product or service in a specific market. To put it simply, TAM is the maximum amount of money a company could potentially make if they captured every single customer in a given market who might be interested in what they’re selling.