Family Business: Merge, Sell, or Transition

Robert H. Nice of Robert H. Nice Consulting in Telford, PA and a member of the Partner On-Call Network just posted a White Paper identifying the broad issues a Family Business needs to consider when buying, selling, or transitioning the family business. Many of these issues are not clearly understood, adequately considered, or even discussed by all family stakeholders.

Robert states it is estimated within the next ten years over a trillion dollars in the United States will be transferred to the next generation. This statement invites many questions for families in business beginning with what must be considered if we are buying or selling the business and if that sale will be to family members. There are some basic facts that all family members should consider if they are looking to grow their business via acquisitions or if they are planning a sale. The family and stakeholders must consider whether the business will be passed or sold to the next generation, or is the family simply looking to harvest the business. In another little known fact, Nice states there are generally 12 Buyers for every profitable business for sale, yet only 20% of businesses ever sell. If the family is acquiring a business are members of the buying family willing to sign personal guarantees.

We have an On-Line Educational Seminar on these issues and more scheduled with Nice for August 17^th at 11:00 AM EST.

For the Family that desires to pass the business to the next generation the issues to be considered not only include the financial concerns Robert discusses, but the interpersonal relationships within the family. Is there a level of trust between family members? Are family members able to openly and honestly discuss all the issues? Is the next generation ready, willing, and able to take over the business? Is Dad really ready to let go?

Further reflection on the issues Robert raises for the family transitioning the business to the next generation, it becomes more evident to me that the planning process must begin now and families must work at educating the next generation long before the transition is at the doorstep. This means instilling values, stewardship, business knowledge, creativity, humility, respect, …I think this list could go on and on.

So how do we help and support this education process?

Let me know your thoughts, and how your family is educating the next generation.