A recent article in the Miami Herald indicates that as many as 90% of all companies in the United States are family-owned. The article proposes several questions that owners of family-owned businesses should consider when contemplating the sale of the family business.
- Why are you considering the sale? Clearly identifying the reason for the sale will dictate the course of action moving forward. The course may change depending on whether you are looking to retire as opposed to just financially realizing on your years of hard work.
- Is an outright sale the best choice? Alternatives such as recapitalization may provide desired funds to the exiting family members while allowing those members to continue to participate in the operations of the business should they so desire.
- Are sales decisions being driving by emotions or good business? Sellers of the business should consult with professions to get an objective view of the value of the business. This is especially true in family businesses where the business is often perceived as an extension of the family which can distort value perceptions.
- Are the selling family members on the same page? Different personalities and goals among family members can lead to conflict and derail a potential sale.
- Are you ready for what comes next? Sellers should consider their future and goals following the sale of the business. Some family members may not be ready for retirement and can feel lost without the stimulation of running the businesses.
Although selling a family-owned business has unique dynamics, we have found that sellers of any type of business are well served to familiarize themselves with the selling/buying process. We offer a summary of the basic steps in the buying process that are also relevant to sellers. We recommend that family members contemplating a sale: (i) educated themselves on issues relevant to the proposed sale of the business; (ii) have open and honest dialogue with the other selling family members, especially with respect to uncomfortable issues, to reduce potential conflict; and (iii) consult with the company’s accountant, attorney, and other professional advisors to develop and execute a sales strategy.
If you would like more information regarding the purchase or sale of your family-owned business, please contact our Business Law Group partner, David A. Closson at [email protected].