Your Internal Transfer of Ownership (ITO) Program

An effective Internal Transfer of Ownership (ITO) program will create a win win situation for both purchasers and sellers of shares in your company.

Your program must be fair to both buyers and sellers or the share sales succession will not take place. Do You Need a Complicated Formula to Price the Shares?

The foundation of and ITO program is a shareholders agreement that facilitates and guides the smooth transition of ownership, which includes a methodology for valuing/pricing the shares.

Is Your Lawyer Drafting Your Shareholders Agreement?

Your shareholders agreement will deal with typical problems that arise in all businesses from time to time, but it needs to address other issues that enhance the process for a professional design company ownership. Should You Purchase Insurance on Shareholders?

The ITO program should clarify for both purchasers and sellers how profits will be distributed.

Profit is the lifeblood of the professional design company, consequently, your ITO program should help both purchasers and sellers increase value for themselves by motivating all employees to increase profitability.

Adequate Profits are necessary in order to continue operations, pay performance bonuses for outstanding performance and provide financially attractive return on investment to shareholders who have invested in the business.

Your ITO program should establish an appropriate share price whenever share sales take place.

The share price should adequately reward selling shareholders while simultaneously providing purchasing shareholders with opportunities to create wealth for themselves. Should You Guarantee A Return to Shareholders?

Should You Discount the Price for Internal Shares sold to Key Employees?

It is important to remember that Shareholders who are purchasers today will eventually become sellers of the same shares in the future.

Your ITO program should clearly state how the share price is determined and shareholders influence on how the share price is determined. Should You Use Projections in Your Pricing?

Your ITO program help clarify management succession.

Your Board of Directors will have a very important role in the transition of ownership, as well as the transition of management, because they will be closely linked.

Does Your Board Have Documented Growth and Profit Goals?

Your selling shareholders and purchasers need a strong involved Board of Directors to manage the internal transfer of ownership program and strengthen the company by selecting the best key employees to become owners.

Selling shareholders will profit financially when they coach, mentor and lead the incoming shareholders and gradually transition their own roles and responsibilities in the company. What is A Gradient of Ownership?

The roles, responsibilities and accountabilities in your company should mirror the levels of ownership in the company.