The future value of any investment you retain will, of course, depend on the performance of the business. This may be an advantage - if, for example, you wish to realise part of your investment because you need the cash, but believe that the business continues to have good prospects. On the other hand, you may be selling because you believe the value of the business has peaked.
Any purchaser will clearly be hoping that the value of the investment will rise. If you are prepared to retain part of your investment - or to link the price paid to the future performance of the business in an 'earn-out' transaction - this may give the purchaser confidence and encourage him to offer a fuller price. As part of an earn-out, the purchaser might also wish to negotiate your continued involvement in running the business. However, there are tax implications arising on 'earn-out' transactions which will need to be considered when structuring such transactions.
Your purchaser (commonly in a management buyout) may not have the funds to purchase the whole of the business now and you may therefore realise part only of your investment now, with arrangements for the sale and purchase of the rest of the business in the near future.
If you are retiring from running the business, realising only part of your investment may risk causing confusion and conflict and may put the balance of your investment at risk. It can be more difficult to hand over management responsibility and authority to your successor: you may be tempted to continue to interfere, and employees may be unclear about who is really in charge.
