Selling any business can be emotion-fuelled and complex, but this is even more likely to be the case if you're thinking of selling a family business. Whether it's a new business that's been nurtured with a sibling, or an established industry brand that's been run under the family name for generations, it won't always be easy to keep your head ruling over your heart so it's vital that you're thoroughly prepared.
Timing your sale
With a family business, it can be tempting to sell at a time that suits you and the other family members tied up in the business. For example, you may want to sell up following a family death or perhaps someone is moving away and you can't manage the business alone.
While this may feel logical, it does leave you vulnerable to any problems in the market; if your sector is consolidating, for example, you could be left out of pocket. If you're in a position to wait, it could be worthwhile financially for you to put off the sale and wait for any specific industry concerns or other market issues to settle so you can secure a good price and ensure your business is going into the right hands.
Assessing its worth
If you're running a business that has simply been handed down from family member to family member, it's likely you won't have a clear idea of how much it's actually worth. Remember, assessing its worth is not just about how much it makes you each year, but also how much it could make someone in the future.
If you can, pay for a reputable expert to spend time valuing your business as far in advance as possible. This will allow you time to consider whether a sale is right for you and your family, as well as providing the opportunity for you to prepare yourself for any bulk financial gain and/or loss of income.
Pensions and risk
It's likely that you and your family reinvest much of your profit in your company, as is typical in of any family business. While this is an understandable and logical approach to running a business that's firmly within the grasp of a single family, it can be difficult and risky when you eventually come to sell.
As a result, it could be sensible to put off a sale for a short time, allowing you and your family the opportunity to remove some of the assets and wealth from the businesses to ensure there are pensions in place for the more senior members of the family. Of course, if you're selling a valuable business at a time when the market is strong, you may be better off selling immediately. Speak to an expert to gain advice on the best approach and ensure your family remains financially secure.
Tracking down records
Family businesses commonly pass down their knowledge and trade tips through word of mouth, preparing the next generation by encouraging observation and 'learning on the job'. While this is a perfectly reasonable approach when the business is to remain with family members, this needs to be addressed if you choose to sell it on to someone else.
Specifically, you'll need to prepare in advance as much of the relevant paperwork as you can, such as invoices, asset details, payroll information, client information and any accreditation your business may hold, to name a few. This can be a very tiring and long task to undertake, so it's best to begin as soon as you can and to involve as many family members (with knowledge of the business) as possible. Once you do come to sell, you will then be fully prepared and the whole experience is likely to run a lot more smoothly.
Of course, there are many other considerations when selling your family business, but taking time to think about the points above should hold you in good stead when you decide the time has come to move on.