In past publications, we have underscored the importance of building internal alignment between the family strategy and the business strategy to create a shared view of the future. This process may become even more complicated when considering succession along with a liquidity event. There are often only a few candidates from the family who are realistically able to move into leadership and sustain multi-generational success. Understanding who is ready and willing to step up well ahead of time can help the family start the succession process by developing future family leaders.

But it’s also valuable to consider if non-family partners will likely be needed one day, whether it’s to provide liquidity to a family founder, infuse cash into the business to accelerate its growth, or help the family diversify its investment portfolio. There are a host of reasons why a family enterprise might need access to outside capital—and plenty of options for accessing it without ceding control.

“Family business owners who balk at the idea of selling their businesses might find there are other options that enable them to access the capital or liquidity desired with far less dilution or even no dilution,” says Max Hughes, managing director of Deloitte Corporate Finance LLC. “You’re limited only by your ultimate goals and imagination.” For example, family leaders wanting to retain control might consider taking on additional debt, with investors receiving a fixed return and only board observation rights or limited board representation.

Even when it comes to equity investments, there are different ways to structure the transaction (e.g., convertible preferred, participating preferred, or minority equity), which can allow the family to retain control while raising capital for growth or family liquidity.

Click here to view an overview of equity alternatives

When family members express an interest in divesting the company or just their stakes, it’s beholden on the rest of the family to better understand their reasons for wanting to sell. Sometimes a third-party intermediary can help the family explore their individual needs, look across the capital structure, and offer a perspective of what could be possible based on the amount of liquidity everyone needs. One of the most difficult stages of this process tends to be balancing larger and smaller distributions among shareholders, which typically requires reallocating equity relative to the unequal distribution of the proceeds. This could be why many families in this situation often have buy-sell agreements in place that designate prices for the internal transfer of equity.

Once the possibility of a sale is on the table, the next step is putting the company in the best possible position to receive a strong offer. Many family businesses have experience as acquirers but may not have as much on the other side of the table, says Jake Wise, managing director at Deloitte & Touche LLP. “This might be the first time they’ve gone through the selling process, so they may not know what they should know,” Wise says.

Specifically, family enterprises need to be prepared to address any issues that might have an impact on the valuation prior to the transactional due diligence and consider how the proceeds can build multi-generational wealth for the family. Here are four preparatory steps family business leaders may want to take before considering a whole or partial sale.

1. Adopt a buyer's pers
2. Focus on quality of earnings
3. Get ahead of tax issues
4. Take steps to protect your proceeds

All this preparation will help the family present the business in the best light to ensure they ultimately realize as much value as possible and achieve all their objectives in a sale. “It’s really a question of how you can best position yourself for the process and put your best foot forward when presenting to buyers,” says Wise.

A sale is a big decision for any enterprise, but for families running a business together it can be especially emotional. For many, there’s a deep and rich history that got them to this point, and the prospect of stepping away from their creation can be distressing. This makes it that much more important to bring a fact-based, disciplined evaluation to the process. Just a little preparation can go a long way in helping family businesses paint the pictures they envision.