Should You Sell Your Family Business?

As a business owner, at some point you might find yourself asking if you should sell your business.
There could be a number of reasons for this, including:

• Difficult family dynamics
• Lack of passion in the business
• The business being less viable each year
• Current management leaving the company

What factors should you take into consideration? Here are 3 elements to consider:

• The Market: Research the market for your company. Are other companies selling? Are investors interested in buying family companies now? Is the market hot or cold? The answers to these questions could make a big difference in the next factor.
• The Industry: Consider how other companies in the same industry are faring. Is the industry changing in a way that may affect your decision to sell? Is the industry dying off?
• The Timing: If the market does not look favorable now, can you wait to sell? Will the company decrease or increase in value if you hold on a little longer?

It’s an emotional thing, selling a family business.

But emotions can’t rule when it comes time to negotiate a sale. Consult with an experienced business attorney before making decisions or signing any documents.

There are many paths you can pursue with regard to succession planning with family members. Some of these options include:

• Estate planning-based solutions: This can include trust options such as intentionally defective grantor trusts, deferred installment sales trusts, or a self-canceling installment note.
• Business succession planning tools: Some examples include a buy-sell agreement, phantom/synthetic equity, or a long-term buyout.
• Traditional options: It can be as simple as a straight sale with seller financing.

We welcome the opportunity to provide you with advice and guidance to make sure your business succession process is successful.