Benjamin Franklin's Printing Business Sale: The Original Annuity Payment Structure in M&A
I’ve always been fascinated by Benjamin Franklin’s life and achievements. Recently, while revisiting one of my favorite books, Benjamin Franklin: An American Life by Walter Isaacson, I was struck by how Franklin's printing business exit parallels modern M&A strategies—particularly his use of what we now recognize as an annuity payment structure.
Let’s explore how Franklin transitioned from a printer to an inventor, philosopher, and politician, and how his strategic exit set him up for success.
Franklin’s Humble Beginnings
Benjamin Franklin was born on January 17, 1706, in Boston, Massachusetts. He was the 15th of 17 children in a modest family, with no clear path to success. Despite his formal education ending at age 10, Franklin’s insatiable curiosity and self-directed learning shaped his future.
At 12, he apprenticed with his older brother, James, a printer, where he mastered the printing trade and refined his writing skills.
In 1723, Franklin moved to Philadelphia and began working as a printer. By 1728, he had established his own printing business, which flourished. His publications, The Pennsylvania Gazette and Poor Richard's Almanack, gained widespread popularity and brought him financial success and social prominence in the American colonies.
The Sale of His Printing Business
In 1748, at 42, Franklin decided to step back from the printing industry to focus on scientific discoveries, public service, and diplomacy. He sold his printing business to his business partner, David Hall, for £18,000—equivalent to roughly $5 million today.
What stands out is the payment structure. Franklin agreed to receive the amount in annual installments of £1,000 over 18 years. This deal provided him with a steady income stream, minimized financial risks, and allowed him the freedom to pursue his varied interests without worrying about money.
What Is an Annuity Payment Structure?
In modern terms, an annuity structure in a business sale means the seller receives payments spread out over a set period (usually 10+ years) rather than collecting the full sum at closing. This method offers significant benefits to the seller:
Reduced Tax Burden: Payments over time lead to lower taxes compared to a lump sum.
Faster Close: Buyers can secure deals more quickly with reduced upfront costs.
Higher Valuation: Sellers can negotiate better terms due to the flexibility offered.
Franklin’s deal is an early example of how an annuity structure can create long-term financial stability, allowing business owners to transition smoothly into their next chapter.
The Legacy of Franklin’s Decision
Thanks to the annuity structure, Franklin retired comfortably and shifted his focus to pursuits that shaped history. Shortly after exiting his printing business, he conducted groundbreaking experiments with electricity, invented the lightning rod, and played a pivotal role in American politics.
What Could an Annuity Structure Do for You?
Benjamin Franklin’s story reminds us that a thoughtful exit strategy can unlock new opportunities. For small business owners today, an annuity payment structure can pave the way for a seamless transition while preserving your financial security.
If you’re considering selling your business, think like Franklin: What’s your next great adventure?
