Parting with your family-owned business is no less difficult than the artist parting with a great work. It is your masterpiece and your life’s dedication. With some planning, you can help position your business to attract buyers. In this installment of our eight-part series, “Pivotal moments for family enterprise,” we’ll chart a path of things to consider when trying to get a fair value for your business and protect wealth for future generations.
When you create something great, it can be tough to let it go. Many artists struggle with the thought of selling their work, and some have even gone so far as refusing to sell to someone they didn’t think valued it as much as they did.
It’s a conundrum familiar to many family business founders, who have worked so hard to realize their vision and can’t imagine it in the hands of someone outside the family. In our global survey of family enterprises, only one in 10 respondents saw an outright sale to a third party or an initial public offering as preferred options for executing their company’s leadership succession. In a separate Deloitte survey, 63% of next-generation family business leaders surveyed said it was “very important” or “fairly important” for the family business to own intellectual property.
But the life cycle of family business ownership is complex, and decisions to exit, in whole or in part, are often driven by individual family members’ wants and needs. The next generation may not be interested or prepared to take over. There may be multiple partners or family members involved, many with different aspirations. Some might want to keep growing the business, while others seek to cash out their stakes.
If a sale is in a family enterprise’s future, its level of preparedness to sell will likely impact the level of interest, valuation, and terms it receives. Fully understanding the options and opportunities can put shareholders in a position to choose the route that is best for the business and their individual needs.
Questions to ask when considering a sale or other capital-raising transactions