Dynamics of a Family Owned Business

The simple fact is that family businesses are different. After all, a family business means working with family and all the good and bad that comes with it.

While an estimated 80% to 90% of all businesses are family owned, relatively few are properly planning for what happens when it comes time to sell a business. According to one study, a whopping 72% of family businesses lack a developed succession plan which is, of course, a recipe for confusion and potentially disaster. Additionally, there are many complicating factors, for example, studies indicate that 40% to 60% of owners of family businesses want the business to remain in the family, but only 40% of businesses are passed to a second generation and a mere 10% are passed down to a third generation.

Let’s turn our attention to a few of the key points that family business owners should consider when selling a business to other parties.

Confidentiality should be placed at the top of your “to do” list. When it comes to selling a family business, it is vital that confidential is strictly observed. Discuss this further with your Business Broker.

Remember that it may be necessary to lower your asking price if maintaining the jobs of family members is a key concern for you.

Family members who stay on after the sale of the business must realize that they will no longer be in charge. In other words, after selling your company the power dynamic will be radically different, meaning that family members will now have to answer to new management, outside investors and an outside board of directors.

Family members will want to appoint a single family member to speak for them in the negotiation process. A failure to appoint a family member could lead to confusion, poor decision making and ultimately the destruction of deals.

When hiring a firm to assist you with selling your company, it is critical that your lawyer, accountant and Business Broker are all experienced and have a proven track. Also, make sure they are active in the marketplace and have the proper and current certifications which shows that they are a true professional.

Don’t hold meetings with potential buyers on-site. An experience Business Broker will know how best to handle this.

Every family member, regardless of whether they are an employee or an investor, must be in agreement regarding the sale of the company. Again, one of your primary goals is to avoid confusion that may spook a qualified buyer.

Family employees and family investors must be in agreement regarding the sale price or there could be problems.

Working with an experienced Business Broker is a savvy move, especially when it comes to selling a family business. Business Brokers know what it takes to make deals happen and create a win win structure for all involved. Being able to point to a Business Broker’s past success will help reduce family member resistance to adopting the exit strategy necessary to successfully sell a business. Make sure the Business Broker has the experience, certifications and is part of a firm with all the necessary resources.

Copyright: Business Brokerage Press, Inc.

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M&A Business Advisors represents sellers and buyers of privately owned businesses in a wide range of industries in California and Nevada. Our services include Selling a Business, Buying a Business, Mergers & Acquisitions, Business Sales and Acquisitions, Valuations, Opinion of Value, SBA Finance and Business Consulting. Sell your Business, Buy a Business, How do I determine the Value of a Business, How do I Sell my Business Confidentially, What is a Safe Way to Sell my Business, How long does it take to Sell a Business, How do I Sell a Business in California, How do I Sell a Business in Nevada, Search Businesses for sale. We represent Sellers and Buyers in Southern California, Los Angeles County, Orange County, Ventura County, Santa Barbara County, Kern County, San Bernardino County, Riverside County, San Diego County, Los Angeles, Torrance, Gardena, South Bay, San Fernando Valley, San Gabriel, Upland, Woodland Hills, Chatsworth, North Hollywood, Van Nuys, Burbank, Glendale, Pasadena, Santa Clarita, Palmdale, Thousand Oaks, Ventura, Camarillo, Newport Beach, Irvine, Anaheim, Brea, Northern California, San Jose, San Francisco, Oakland, San Ramon, Napa, Sacramento, Nevada, Northern Nevada, Southern Nevada, Reno, Carson City, Tahoe, Las Vegas.