selling a family business

Selling A Family Business

Selling a family business presents its own set of obstacles. A family business often serves as the main source of income for both the owner and their children. Other family members may hold ownership without being directly involved. When the owner decides to sell, this can spark strong emotions, strain relationships and potentially lead to legal complications (watch Succession for a fascinating study in family business dynamics).

Selling a family business can be a complex and emotional process. A family business often represents a lifetime of hard work and dedication, and it can be difficult to let go. However, there may come a time when selling the business is the best decision for the family’s financial well-being, and it’s important to approach the process with care and consideration.

In this article, we’ll explore some key considerations when selling a family business, including assessing the business’s value, finding potential buyers, and navigating the emotional challenges of letting go.

Assessing the Business’s Value

Before you can sell a family business, you need to have a clear understanding of its business value. This can be a complex process that involves analyzing financial statements, market trends, and industry norms. You may want to work with a business appraiser or other professional to get a realistic sense of what the business is worth.

It’s also important to consider any debts or liabilities that the business may have. These will need to be factored into the sale price and can impact the terms of the sale.

Finding Potential Buyers

Once you have a sense of the business’s value, it’s time to start looking for potential buyers. This can be a challenging process, especially if the business is a niche operation or has a unique customer base.

One option is to work with a business broker who have networks of potential buyers and can help you market the business in a way that maximizes its value.

You may also want to consider reaching out to competitors or other companies in the industry. They may be interested in acquiring your business as a way to expand their own operations.

selling a family business

Navigating the Emotional Challenges

Selling a family business can be an emotional process. It’s important to remember that the business represents more than just a financial asset; it’s often tied to the family’s identity and legacy.

One way to address these emotional challenges is to involve the entire family in the decision-making process. This can help ensure that everyone’s concerns and priorities are heard and can help facilitate a smoother transition.

It’s also important to have a clear plan for what will happen after the business is sold. This may involve identifying new opportunities or focusing on other aspects of the family’s financial plan.

Issues Facing the Owners

Baby boomers with successful businesses are retiring at a fast rate, many of them family businesses. They may face several obstacles upon retirement:

  • Most of an owner’s net worth lies within their business, so successfully selling it enables him or her to fund retirement and secure financial independence.
  • Sellers may have formed close bonds with employees over time; will these employees stay after selling the business?
  • Can owners sell their business to family members who will continue managing it?
  • Are there family members with ownership who do not participate in daily operations of the business?

Family members not involved with the business may raise concerns with its sale to another. If these relatives own shares in it or will stand to benefit financially from its sale, they could question what plans it has for its future development.

Before your emotions run too high, speak with a business broker regarding your family business. An intermediary in this sense serves as a trusted adviser throughout the selling process and is charged with various tasks such as:

  1. Understanding a seller’s motivations, and any issues that could delay or prevent a sale.
  2. Pre-screen buyers to determine whether they have enough financing available for purchase of your business.
  3. Perform a business valuation to establish its price.
  4. Analyze sales figures of comparable businesses, industry trends, and market factors.
  5. Oversee the due diligence and sales process to ensure a smooth transfer.

Business Brokers

When selling a family business, an experienced business broker can assist the family business owners in successfully selling their company. These professionals are adept at handling difficult family dynamics that may arise during this process and helping the transaction to progress efficiently to completion. When selling a family business, it’s crucial that all aspects are taken into consideration for maximum effectiveness.

Your broker will develop marketing materials to showcase your company to potential buyers. An experienced broker is adept at convincing potential purchasers, increasing the odds of sale.

Brokers negotiate the final sale price on your behalf and will ensure all necessary documents are signed at closing. Additionally, brokers will assure that all necessary steps for a successful sale take place. These steps include:

  • Compile complete sets of financial statements from the last three to five years.
  • Go over all contracts with vendors and suppliers to make any necessary updates or changes before the sale.
  • Prepare all required disclosures
  • Prepare for buyer’s due diligence
  • Work with the landlord to transfer the lease agreement or prepare a new one.

When selling a family business, your business broker can guide you through the necessary steps needed to sell your family business. As soon as you start discussing sale possibilities, take note of what makes it appealing and assess its true worth. Eventually you may wish to consider multiple offers. Keeping this information in mind could help determine the market price. Depending on its value and characteristics of its current ownership structure.

selling a family business

Selling A Family Business

When selling a family business, businesses offering the following benefits will appeal most to buyers because they are universally desired elements that make a business a low-risk, high-gain opportunity and worthy of investment.

Brand Awareness in the Market

When selling a family business, it’s important to consider the role of brand awareness in the market. A well-established brand can be a significant asset when it comes to attracting potential buyers and maximizing the sale price. However, it’s also important to be realistic about the value of the brand and how it’s perceived in the marketplace. This may involve conducting market research or working with a branding consultant to get a clearer sense of the brand’s strengths and weaknesses. Ultimately, a strong brand can help differentiate the business from competitors and make it more appealing to potential buyers, but it’s important to have a realistic sense of its value and how it fits into the overall sales strategy.

Financial Results

Assessing the financial performance of a family business is a critical step when considering selling the business. Potential buyers will be interested in the business’s financial performance, including revenue, profitability, and cash flow. It’s important to have a clear understanding of the business’s financials and to be able to present them in a compelling way to potential buyers. This may involve working with a financial advisor or accountant to prepare financial statements and projections.

In addition to presenting the numbers, when selling a family business, it’s important to be able to tell a story about the business’s financial performance and to highlight any key growth opportunities. A strong financial performance can help increase the sale price and make the business more attractive to potential buyers, so it’s worth investing the time and resources to ensure that the financials are in good order.

Turnkey businesses

A turnkey business is one that is ready to be operated immediately upon purchase, with all the necessary systems and processes in place. This can be an attractive option for buyers who want to minimize the risk and time involved in starting a new business from scratch.

When selling a family business, turning it into a turnkey business may involve investing in systems and processes that can be easily transferred to a new owner. This may include developing a standard operating manual, implementing clear processes and procedures, and ensuring that all necessary licenses and permits are in place. By investing in a turnkey business, buyers can be confident that they have the tools and resources they need to succeed, while the family can maximize the value of the business and ensure a smoother transition of ownership.


Companies with “above average” customer experience maturity tend to perform financially better than competitors. If customers can enjoy making purchases easily with you, they’re more likely to return. In business sales, the difference between the asset value and the sales prices is known as “goodwill” which is essentially the reputation of the business.

The reputation of a family business is an important consideration when it comes to selling the business. A strong reputation can help attract potential buyers and increase the sale price, while a negative reputation can make it more difficult to find buyers and may result in a lower sale price.

It’s important to have a clear understanding of the business’s reputation in the marketplace and to take steps to address any issues that may be impacting its perception. This may involve investing in marketing and public relations to highlight the business’s strengths and positive aspects, as well as addressing any negative reviews or feedback. Building a strong reputation takes time and effort, but it can pay off in the form of a higher sale price and a smoother transition of ownership.

selling a family business

Selling to Family Members?

When selling a family business, are your family members actively engaged and producing results in your business? It is a difficult yet necessary question. If a family employee does not add true value to the organization, any prospective buyers might not want them around post-purchase. Finding out whether your chosen family member has the necessary experience and work ethic is absolutely key if the sale payout depends on future earnings of the business.

If you are selling a family business to other family members, there are some unique considerations to keep in mind. While selling to family members can help ensure that the business stays within the family and that its legacy is preserved, it’s important to approach the process with care and consideration.

One key consideration when selling a family business, is how to structure the sale in a way that is fair to all parties involved. This may involve working with a mediator or financial advisor to develop a clear and equitable plan for the sale. It’s also important to establish clear boundaries and expectations around the sale and to ensure that everyone involved is on the same page. By approaching the sale with transparency and open communication, you can help ensure a smoother transition of ownership and a stronger family dynamic.

Your business could be your largest asset and may have taken years of work to develop, making it crucial that you engage in honest conversations with family members about selling it for maximum return.

Contact Mission Peak Brokers for your complimentary business valuation today to help you get started on the process of selling your business. We have extensive experience working with family businesses and appreciate the professional and personal complexities involved and are skilled in helping navigating the process towards a successful resolution.

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