Preparing for Transition: Navigating the Decision to Sell Your Family Business
As trusted advisors to family-owned enterprises, we understand the complex emotions and considerations involved in contemplating the sale of a business. According to a 2019 PricewaterhouseCoopers (PwC) study, approximately 52% of family-owned companies globally had no succession plan.
In many cases, the family business has served as a cornerstone of livelihoods, providing financial security and a sense of identity and purpose over the years. However, as the business owner approaches retirement age, the company may be sold. Before making this significant decision, the family must engage in open and transparent discussions. In this guide, we'll outline critical questions and conversations to facilitate this process and ensure that the decision reflects the family's collective goals, values, and aspirations:
Family Goals and Values: Initiate a discussion on the collective goals and values of the family. Consider what matters most to each family member and how those priorities align with the future of the business.
Interest and Involvement: Explore each family member's interest and willingness to participate in the business. While none of the children may be currently involved, their perspectives on the potential sale and future involvement should be considered.
Financial Planning: Delve into the financial implications of selling the business. Discuss how the proceeds will be managed and distributed among family members, and involve financial advisors and estate planners to ensure a comprehensive plan.
Legacy and Succession: Reflect on the legacy of the business and how a sale might impact it. Consider alternative succession plans, such as grooming a successor from within the family or the company.
Emotional Impact: Acknowledge the emotional aspect of selling a business that has been a significant part of the family's life and history. Allow each family member to express their feelings and concerns about the decision.
Future Plans: Outline retirement plans and how they align with the sale of the business. Could you talk about what is envisioned for post-retirement life and how it will affect the family?
Family Harmony: Consider how the decision to sell the business might impact family relationships. To maintain harmony within the family, prioritize open communication and mutual understanding.
Professional Advice: Encourage the family to seek guidance from lawyers, accountants, and financial advisors. These experts can offer valuable insights and support throughout the decision-making process.
Timeline and Process: Establish a timeline and process for selling the business. Please keep the family informed about critical milestones and decisions to ensure their openness.
Final Decision: The final decision should be made as a family. While the business owner may have the authority, it's essential to consider the wishes and concerns of all family members before moving forward.
By engaging in these conversations and addressing these questions, the family can thoughtfully navigate the decision to sell the business. This ensures that whatever path is chosen reflects the best interests of everyone involved.
As trusted advisors, we are here to support the family through this process, upholding the legacy of the family business while embracing the opportunities that lie ahead.