Selling a Family-Owned Business: Unique Challenges and Opportunities
Few things bring you the same kind of pride that a family business does. However, whether you founded the company or inherited it, the time might come when selling your business is the best option.
However, the fact that selling your family business is the best option doesn’t mean it’s an easy one. This kind of sale comes with plenty of unique opportunities and obstacles, and if you’re familiar with them ahead of time, you can make sure you’re prepared.
Emotional Considerations
The process of selling a family business is a uniquely emotional one. Looking after your own mental well-being during the sale is wise, but it’s also important to make sure all family members are on the same page.
Keep in mind that other family members are probably struggling with the sale as much as you are, and do your best to be patient with them throughout the process.
There’s another emotional consideration to keep in mind, too — when strong emotions are involved, it can be hard to think objectively.
Having outside advisers when you’re selling your business is never a bad thing. But when it’s something as fraught as selling a family business, outside perspectives can be especially important.
Succession Planning
It’s easy to get so wrapped up in running your family’s business that you don’t even think about planning for the future. However, the best time to create your succession plan is when you don’t need one.
When your family can decide on how and when the business will be sold, you’ll be able to avoid conflicts in the future. These are some general tips:
- Give yourself plenty of time to make a succession plan
- Remember that ownership succession and leadership succession are not the same
- Don’t assume a given family member wants to take over — always ask
- Decide whether you want to pass the business down or sell to someone outside your family
Succession planning is complicated, and when you’re dealing with a family-run business, it can be more difficult to think objectively. It’s always wise to get the advice of an experienced attorney.
Valuation and Financial Preparation
It might sound obvious, but before you sell your business, you need to know its value. However, not all business valuations are created equal. Some are far more exact than others, and when you’re making a major step like selling your business, the valuation should be as accurate as possible.
You can get a quick estimate of your company’s value with our free valuation calculator. However, if you’re interested in selling your business in the near future, a business broker can give you a more precise valuation.
Brokers also have a good working knowledge of the current market, so they’ll be able to set a price that’s low enough to be competitive but high enough to give you a respectable profit.
Before you sell, you should make sure your financial records are clear and organized. Financial forecasting can be a great way to appeal to potential buyers. They want to see what your company has achieved in the past, but they also want to invest in a business that’s poised for growth, and a financial forecast will illustrate that potential growth.
Selling Your Business? We Can Help
Selling a family business can be immensely complicated. In most cases, having the help of an outside professional can make things simpler and faster.
At Sunbelt Business Brokers, we’re uniquely attuned to the needs of small business owners, and we’ve helped countless family business owners like you negotiate successful sales. If you have questions or you’re ready to sell, contact us today!
