Insights / Family Business Resource Center
Reflections on Selling the Family Business
By James Ebberson
09.12.16
It is fall again. A time for reflection. In that spirit, we bring you an article published by the New York Times this past summer that describes the lessons learned by owners through the process of selling their family business.
In addition to reflecting on the emotional aspects of selling a family business to which the owners have often dedicated their lives, this article contains practical advice that can be implemented by family business owners contemplating a future sale. In particular:
- Run the business as though a buyer may come along at any moment. This includes following corporate formalities (such as maintaining proper books and records and holding regular board meetings) and being more formal in how family members are treated.
- Signing a letter of intent or memorandum of understanding is the beginning and not the end of the sale process. While having an initial agreement may be exciting and worth celebrating, the buyer’s due diligence and negotiation of definitive agreements may take several months or more, and it is important not to run the business as though the deal is done before it is.
- Have key people in place that can help with continuity following a sale. Even after receiving the check, owners are often emotionally tied to the business they built, and having capable employees in place that are dedicated to the business can help ensure continued success.
- If you are thinking about selling the family business, consult with advisors sooner than later. Experienced financial and legal advisors are intimately familiar with the process of selling a business and can provide valuable outside perspective on how to prepare for a future sale and obtain the best terms possible.