To sell or not to sell the family business?
The right answer is not the same for everyone– it is whatever works for you and your family.
The decision of whether or not to sell the family business is often a difficult one. No matter if the business has been nurtured and handed down through several generations or is still in the hands of the founder, deciding whether or not to sell can be tough.
We like to remind families that there is nothing wrong with selling if that’s what makes sense to the stakeholder group. On the contrary, sometimes it is the sensible thing to do. Often the business is no longer the right asset for the family. Similarly, sometimes the family is no longer the right constellation of owners for the business. It’s only a “failure” or a tragedy if the family business gets sold due to unmanaged conflict or insufficient planning.
Of course, selling a family business often becomes especially difficult when some stakeholders want to sell and others don’t. This lack of alignment can lead to indecision or a failed process, not to mention triggering conflict that could damage relationships.
While Continuity is in the business of helping families prevent a tragic unplanned sale, we have also helped several families move on from their family businesses with purpose, to deploy their wealth in ways they find more fulfilling.
Good Governance is Essential to Succession
Here are several reasons why other families have considered selling their family businesses:
- Lack of heirs interested in the business
- Market changes making independence unsustainable
- The “too-good-to-be-true” offer
- Changing priorities due to health issues or personal crisis
- Need for shareholder liquidity
- Fragmented, dispersed ownership
- Intractable conflict
Often our work focuses on helping families decide what makes the most sense for them. We educate families on various options, how they should be approached, and then help them assemble the appropriate teams to achieve their goal. Sometimes we help families find ways to avoid a sale, reinvigorating family ownership. Other times we help them bring in capital to buy out some shareholders who are looking for liquidity. No matter what decision is finally made—to sell or not to sell—going through an assessment process with the support of experienced, impartial advisors can help families make sure they have thoroughly considered their own goals and aspirations, the interests of all stakeholders, and all alternatives.
Selling a family business is an experience that most owners go through only once in their lives. They soon learn that the process of selling the family business or bringing in a financial partner is complicated and presents its share of risks. This limited experience is different from that of potential buyers and investment bankers, who buy and sell firms many times each year.
Having a trusted, objective and knowledgeable advisor in your corner can help you fully assess your options and make a decision you will not regret. If you choose to sell your family business, an advisor can make the difference between a sale that meets your objectives and one that falls short of your goal; or it may even protect your sale from failing to get to the finish line. What’s more, going through a guided process of articulating your objectives and contextualizing them within your greater family, its history, and its narrative can make evaluating your decision—whether it is to stay or sell—one that enriches and informs whatever next step you chose to take.
Look for the right off ramp from the family business? Contact Continuity to plan your exit strategy.
Don’t want your business to change hands but you are ready for a “changing of the guard?” Learn about Continuity’s approach to succession planning.