Selling a Family Business
It is inevitable that when you own a family business, there will come a time when you must contemplate whether it should be sold. When we refer to selling a family business, we are usually talking about one of the following options:
- Selling the business outright to an individual or to a group outside the family
- Selling the business to family members who may or may not already be involved with the daily operations of the business
- Selling part of the business either to outsiders or to insiders (or to a combination of both)
As may be apparent, selling a family business can be a complicated matter, with many pieces and moving parts. If you are a leader of a family business and you decide that it’s time for a change, various options should be reviewed before you come to a decision about selling it. For example, the business can be simply shut down. Or, the family business can be passed to a new set of family successors without an actual sale-taking place. In any case, it is essential to consider many factors before moving forward.
"A family business should be treated like any other asset. When you make an investment, your motive is to maximize your return from that investment. The same applies to family businesses."
The Little Red Book of Family Business: Page 88
Can Selling a Family Business Happen Quickly?
Anything can be done quickly; however, a quick sale of a family business isn’t usually recommended. The most successful sales are completed after ample time to plan and a thorough review of all available options. In some cases, the successful sale and transition of a family business can take several years.
When making the decision to sell a family business, it’s important to take the following factors into consideration:
- Having a full understanding of the true value of your family business. A family business is an asset and should be treated as such. Selling the business for its true value is essential to maximizing your return. The value of a family business is based on numbers and not necessarily on the family’s emotional attachment to the business.
- Knowing the extent to which you are counting on the sale of your family business to create wealth. Remember, timing is everything. You want to sell while the demand for your business is at a high point, not a low point.
- Being aware of how your family might cope if you decide to sell a portion of the business. Any change in the ownership will create a new dynamic, and family members need to be made aware of what to expect with new company leadership.
Selling a Family Business is an Emotional Experience
It can almost never be said that selling a family business is easy. In fact, selling a business that has been in your family for more than one generation can be extremely challenging. Emotional attachment to your business can play a big role in both when and how you want to sell it. It’s important to remember that selling your business should be your decision – it should not be determined by what you think the original founders of the business would have wanted or would have done.
Does Your Family Business Need Help?
Family Business Matters has extensive experience assisting with Selling a Family Business. With many decades of experience, we understand the wide variety of challenges that families face as they work together to build, grow and sustain a thriving family business generation after generation. Through conferences, continuing education programs, family business retreats, speaking engagements and private family business consulting services, Family Business Matters has assisted more than 450 family-owned businesses around the world chart their way through family business issues of all shapes and sizes.
For more information on how Family Business Matters can help your family business survive and thrive, please contact us today at (970) 948-5077.