In our previous blog, we looked at the ins and outs of selling a family business
. In this piece, we head to the other side of the negotiating table, and examine how to go about purchasing a family business, when you're not a member of the family.
A successful family business can be incredibly attractive acquisition, should you get the opportunity. With generations of success and expertise, a strong ethos and sense of values, a tight-knit staff and solid ties to clients and customers alike, some of the most solid businesses are those with a family unit behind them.
However, should the opportunity arise for you to acquire one, then choosing to pursue such a deal will present unique challenges to you, both as a buyer and, ultimately, as owner. After all, the entire business has been built on one family.
That goes for relationships with clients and loyal customers, built on close, personal trust, and for the years of success and a solid reputation that have become synonymous with the family name.
Preserving these things will be vital to making the acquisition a successful one going forward, while going about the process in the right way can ensure a smooth transaction that benefits all sides. Here we outline three key things that you, as a buyer, should do to ensure that your purchase goes well and that the acquisition proves successful in the long term.
1 - Know the business
You will undoubtedly have your own ideas and plans for when you take over the business, but learning what has made it tick for so long, and preserving some elements of that, will be vital in you ensuring a successful business going forward.
Getting to know the business during the acquisition process is invaluable. Talk to customers, talk to clients and talk to staff, to get a feel for the different ways the company works. This will also assist you in gaining the trust of the most important people ahead of you actually taking over.
Looking at the business’ accounts and other documentation will also help you get a picture of when and how the business has performed best, what it does well and what areas you could improve on or grow or that might need tightening up.
2 - Know the family
It goes without saying that the family unit behind any family business will have been the key to its success and its longevity. Each successive generation instils in the next the values and ethos of the firm and, as a whole, the family will have set everything from its culture and its business model to its brand and identity.
Simply put, with a family business, getting to know the family is a big part of getting to know the business itself. It will offer several key benefits to you as a potential buyer and owner.
Firstly, it will go a long way towards ensuring negotiations are smooth. If you show the interest and application to learn from and get to know the family, then you can instil in them the confidence that you are the right person to take it forward. This will be invaluable in the sale process and overall transition.
Secondly, it will provide you with a crucial insight into the very soul of the business, from the people who built it and who made it function, helping you bring continued success to the company after they’ve gone.
3 - Approach negotiations in the right way
As we discussed in our last post, selling a family business that has been handed down across generations and is so strongly aligned with the family itself will be an incredibly difficult time for the selling party. By extension, it will undoubtedly be a more delicate process for you as a buyer than most other acquisitions you are likely to undertake.
Approaching negotiations sensitively and professionally, with a keen sense of how difficult they might be for the family, will not only benefit them, it will benefit your efforts to acquire the business. If you are professional, courteous and understanding during the acquisition, the family will be reassured that they are making the right decision and this will contribute to an easier takeover.
Rushing the process, or becoming impatient if things take longer than you hoped for, could quickly sour the deal, leading to an acrimonious acquisition that hurts the business' prospects going forward, or, even worse, potentially causing the selling family to have a change of heart.