Deciding to sell any business can be a complicated matter. It is even more complicated when this decision involves multiple members of your family, as is the case with family-owned businesses. While many business owners dream of passing on ownership of their business to future generations, this may not always be the best decision for you or your business.
There are many reasons that may lead you to decide to sell the family business, such as:
- Your children are not interested in taking over the business
As a parent, you may hope that your children will be eager to take over the family business when it is your time to retire. If they are not interested, then selling the business is likely your best exit strategy. Forcing the business on your children is almost guaranteed to lead to family resentment and poor business performance.
- Your children are not capable of taking over the business
Running a business is not for everyone. While your children may be interested in taking over the family business, it is important to assess whether they have the necessary skills and qualifications to successfully run and grow the business.
- There are too many owners of the business.
Unless the business continues to grow, it can be difficult for a family-owned business to support a growing number of owners. In this case, the business will be unable to pay salaries and dividends to the growing number of family members with ownership stakes. Additionally, too many owners can also disrupt the management of the business.
- You receive an offer that is too good to turn down.
Markets go up and down, and although rare, you may be approached with an unsolicited offer that is too good to refuse. It is important to always know the market value of your business so that you can be well informed when evaluating offers.
- The next generation does not work well together.
Running a family business requires family members to work together. If the children are capable of running the business but do not get along, these strained relationships are likely to get even worse.
It is important to plan ahead for the sale of your business. Being prepared for your exit will help to ensure you are able to sell your business quickly and for the highest price.
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