Should you sell your family business? How to decide.

In our previous blog, we outlined some important reasons why entrepreneurs should consider selling their businesses (http://www.versaillesgroup.com/ma-deals-when-should-i-sell-my-business/). However, the decision to sell can be complicated by family considerations. Selling a family-owned business can be a difficult process for some, as these businesses often represent the culmination of years or even generations of hard work.

While many entrepreneurs aspire to pass on the family business to their children, doing so may not always be a feasible option. Under these circumstances, you should consider the possible sale of the business as it can provide you and your family with many benefits. Selling a company usually results in a large cash payout, which allows you to pay for your children’s college educations, enables you to retire, and provides financial security for your family. The financial security should not be underestimated. Most business owners have a majority of their net worth tied up in their business. A sale of the company provides them with an opportunity to diversify.

In summary, you should consider selling the family business if:

No clear successor in the family: If you do not believe any of your children or immediate kin are qualified to run the family business, then selling may actually be the best way to secure their future. In some cases, your children do not have an interest in the family business and would like to explore different opportunities. In other cases, your children may lack the appropriate skills to properly manage the company. Either way, if these succession issues are not addressed, they can damage the value of the business and financial security of the family.

The business is causing strain among family members: If managing the business is causing strains on family relationships, then selling the business outright may be your best option. A family business cannot run properly if personal relationships are distracting management. Under these conditions, it may be better to sell the company in order to reward the family with a large payout that will allow family members to pursue new ventures.

You want to instill entrepreneurial values within your own children: As an entrepreneur, you may wish your children to experience the same discovery process that you did when you were building your business. However, passing on your family-owned company as inheritance may actually inhibit the development of these values within your children by depriving them of the opportunity to forge their own paths through life. By selling the business, you can secure your finances for retirement, preserve the legacy of your business if it is acquired by an experienced operator, and provide your children with the capital they will need to develop their own entrepreneurial pursuits.

For more information, please contact

Donald Grava

617-449-3325