Sell the Business, Keep the Peace

We asked Sally Anne Hughes, founder of business brokerage firm Hughes Klaiber LLC, for a few considerations to keep in mind when preparing to sell a family business to a third party buyer.

Conflicting Goals

While one person may be the leader of the business, other family members are working in thebusiness may have conflicting goals. For example, if you want to sell to a competitor, they may be interested in buying your business and consolidating functions. If your sister works in HR and the buyer plans to roll those functions into existing departments, you may have a problem. Discussing these issues upfront with potential buyers is essential.

Valuation Challenges

If you have multiple owners in the family, valuation can become a challenge. Instead of one person, you are splitting proceeds between multiple people, and after taxes it sometimes doesn’t make sense to sell. If you want to sell to retire, is your business large enough where the proceeds will fund the retirement for all family members involved? If not, what are the changes you have to make now to increase the value in the future?