Small, family-owned businesses make up a significant part of the American economy. Those who own family businesses understand the challenges that come with this responsibility. Sometimes, for one reason or another, one may choose to sell the family business, whether out of necessity or financial strategy. When it comes time for selling the family business, the decision involves a number of factors, since a business that has been passed down through generations is apt to have more emotional ties.
One of the most common reasons that one may consider selling the family business is due to the fact that the next generation is unequipped or unwilling to take over. Whether the beneficiaries have different goals in mind or fail to possess dedication and business sense, being left without a business successor is a common and valid reason to sell. It is a better idea to sell the business to someone that will drive it to further success than a disinterested family member that is forecasted to run it into the ground.
Another indicator of it being time to sell the family business is if the next generation is having difficulties getting along. If they are not working together well in familial situation, they will not succeed in a professional setting.
Sometimes the financials of family businesses become exhausted when it has too many “owners.” While these people may not pull their weight in actually managing the company, they are still on the payroll, and this can prove difficult if the number of owners grows while the profitability remains stagnant. In this case, selling the family business to an outside buyer may be the best choice.
However, selling the family business does not necessarily mean that it must be sold to a stranger. Some parents choose to sell their business to their children. Transferring the business through seller financing is a one way to provide the current owner with a steady stream of income while transitioning the new owner to take over.
Whether one is planning on selling the family business to an outsider or another family member, this type of transaction is not one that should be undertaken on one’s own. A business broker will know the ins and outs on selling a business and can provide expert advice on strategies such as lowering tax consequences or staying on as an owner to improve the value of the company.
If you would like to learn more about how a business broker can assist you in selling the family business, please contact George & Company in full confidence. We will listen to your needs and help you find the best buyer, whether they be internal or a professional business buyer.