Selling part of my business: how a partial sale works
Selling part of your business lets you take some wealth off the table, prepare for succession or raise growth capital without giving up everything. The price depends on what you sell: a minority stake is usually worth proportionally less than control, and the shareholders agreement matters as much as the number. Before talking to investors, know what the whole business is worth and decide whether the money goes to you or to the company.
Why sell only part of the business
Many owners do not want to sell the whole company, yet they are uneasy keeping most of the family wealth tied up in a single business. A partial sale of a business can serve several goals:
- Partial liquidity. Turn part of your stake into cash, diversify and keep owning the rest.
- Succession. Bring in a partner who helps professionalize management and prepare the next generation, or fund the exit of a co-owner who wants out.
- Growth capital. Pay for expansion, an acquisition or new investment without taking on more debt.
Each goal points to a different structure. So the first question is not “what can I get for 20%?” but “what do I want this sale to solve?”
Minority stake or control
Selling a minority stake (less than half of the shares) is a different transaction from selling control.
| Minority stake | Control | |
|---|---|---|
| Who runs the business | You do | The buyer |
| Price per share | Tends to be below the pro rata value | Tends to be above the pro rata value |
| Buyer’s protection | Comes from the shareholders agreement | Comes from control itself |
| Investor’s exit | Must be written into the contract | The buyer decides |
A control premium exists because whoever controls the company chooses management, dividend policy and when to sell. A minority discount reflects the opposite: a small shareholder depends on others’ decisions and may struggle to sell. There is no fixed table for the size of this gap. It depends on the industry, the buyer and, above all, the rights the investor secures. The more protection the investor gets, the smaller the discount it usually asks for.
The starting point is always the value of the whole business. See enterprise value vs equity value and how to value a partner’s share.
Money to you or money to the company
This is the decision that changes the math the most.
- Secondary sale: the investor buys shares you already own. The money goes to you; the company’s cash does not change.
- Primary sale (capital increase): the company issues new shares and the investor’s money goes into the business. You receive nothing now, but the company gains resources to grow.
Many deals combine both. Primary deals use two terms: pre-money is the equity value before the investment; post-money is that value plus the new money.
Illustrative example, using the fictional company in our sample valuation report, whose equity value came out between BRL 32.9 and 38.9 million (the company is in Brazil, so figures are in Brazilian reais). Suppose investor and owner agree on BRL 35 million for the equity, before any discount or premium:
| Secondary | Primary | |
|---|---|---|
| Stake sold | 20% | 20% |
| Agreed equity value | BRL 35m | BRL 35m (pre-money) |
| Investor’s money | BRL 7m | BRL 8.75m |
| Where it goes | To the owner | Into the company |
| Equity value afterwards | BRL 35m | BRL 43.75m (post-money) |
In the primary deal the investor must put in more to end up with the same 20%, because the company is now worth its previous value plus the new cash (8.75 divided by 43.75 is 20%). The numbers are fictional and only show the mechanics.
What the shareholders agreement must cover
In a partial sale, the shareholders agreement matters as much as the price. It governs how you and the investor will work together for years. The key points, in plain terms:
- Tag along. If you later sell control, the investor can sell its shares on the same terms.
- Drag along. If a buyer appears for the whole company, you can require the minority holder to sell too, so it cannot block the deal. Negotiate a minimum price.
- Board. How many seats the investor gets and which decisions go to the board.
- Veto rights. A closed list of decisions that need the investor’s consent, such as debt above a limit, selling major assets, changing the line of business or admitting new shareholders. A short, clear list avoids deadlock.
- Investor’s exit. Funds must return money to their own investors within a set period. The agreement should state how they leave: sale to a third party, sale of the whole company or a put option, which obliges you or the company to buy their stake under certain conditions. A poorly drafted put can become a large personal liability.
- Dividends, information and non-compete. Profit distribution policy, the reports the investor receives and what each shareholder may do outside the company.
In Brazil, these terms are usually set out in an acordo de sócios (or acordo de acionistas for corporations), and some must also be reflected in the company’s bylaws to bind third parties. Your corporate lawyer should check this.
Who buys minority stakes
- Private equity and growth funds: bring capital and governance and expect a return within a set period.
- Family offices: often have a longer horizon and more flexible exit terms.
- Strategic partners: suppliers, customers or industry players seeking synergies and, sometimes, an option to buy control later.
Each type accepts different rights and pays in a different way. Knowing who is across the table helps you anticipate what they will ask for.
How your role changes
With an investor on board, you still run the business, but you become accountable: an approved budget, board meetings, monthly reports, audited accounts. For many owners this discipline makes the company more valuable and easier to sell later. For others it is a heavy personal cost. Think about it before you sign.
Common traps
- Negotiating the percentage before the value. If you do not know what the whole company is worth, you do not know what 20% is worth.
- Accepting broad vetoes. A veto over everything means sharing control without being paid a premium for it.
- Signing a put without running the numbers. It may force you to buy back the stake at a bad time.
- Ignoring drag along. Without it, a minority holder can stop a future sale of the whole company.
Start with the business valuation calculator for a first range and, if a full sale is also on your mind, read how to sell your business.
Meu Equity carries out the business valuation before you meet investors and reviews the offer and the shareholders agreement with you.
Frequently asked questions
Straight answers for owners thinking about valuing or selling their company.
Still have questions? Talk to a specialistCan I sell part of my business and stay in control?
Yes, if you sell a minority stake. The investor receives rights set out in the shareholders agreement, such as a board seat and a veto over major decisions, but day to day management stays with you.
Is a 20% stake worth 20% of the business value?
Not always. The pro rata figure is the starting point, but a minority stake may carry a discount because it brings neither control nor easy resale, while control may carry a premium. The rights negotiated in the shareholders agreement narrow or widen that gap.
What is the difference between a primary and a secondary sale?
In a primary deal the investor puts money into the company in exchange for new shares, and the cash stays in the business. In a secondary deal the investor buys existing shares, and the cash goes to the shareholder who sells.
Who buys minority stakes in private companies?
Mainly private equity and growth funds, family offices and strategic partners in the same industry, such as suppliers, customers or companies that want a position before a possible full acquisition.
