IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family-owned businesses. The following blog article has been provided by Mr. Seth Rudin and Ms. Savannah Suttle. Mr. Rudin is a senior business broker at IBA (www.ibainc.com) and Ms. Suttle is the founder and CEO of SCHEMA Management Consulting (www.schemaconsult.com) which is focused on assisting family-owned & operated businesses when family dynamics impact operations. Schema provides coaching and organizational design consulting to leaders of companies seeking to grow more effectively, with relational resilience and operational efficiency.
Selling a Family Business: Strategies for Maintaining Harmony
Don’t sell yourself short by neglecting the family part of the family business sale. Selling a family business can be as complex emotionally as it is financially. The intermingling of personal relationships and professional interests can lead to unique challenges that aren’t typically present in non-family enterprises. Understanding and managing these dynamics effectively can make the difference between a successful transaction and a fraught one.
Establish Clear Communication Channels
Communication is the cornerstone of navigating family dynamics during a business sale. It’s essential to ensure that every family member feels heard and understood. Regular family meetings can be an effective way to keep everyone informed and involved, allowing members to voice concerns and preferences regarding the sale process. Clear, transparent, and proactive communication is required to prevent misunderstandings and conflicts from escalating — not just during the sale, but afterward. Setting the proper expectations up front with your family members will help avoid these unwelcome surprises.
Define Roles and Responsibilities
In family businesses, roles can be blurred between who is an owner, an employee, or both. During the sale process, defining each family member’s role can help clarify who makes decisions and how those decisions are communicated. This structure prevents miscommunication around the necessary, intrinsic overlap of personal and professional boundaries. Most importantly, however, it reduces confusion, anxiety, and potential conflict by creating clear expectations.
Seek External Facilitation
Bringing in an unbiased third party, such as a business consultant, coach, facilitator, or mediator, can help manage tensions that arise during the sale. Emotional drivers impact business decisions, so don’t be afraid to factor emotions into the equation. External advisors can facilitate difficult conversations, helping the family (or individual members) find alignment between emotional drivers and tactical decisions. Hiring a Business Broker who can lead the process of selling your family-owned business as well as acting as a neutral third party to the buyer will often lesson the pressure on family members. An experienced and skilled M&A intermediary will provide proper guidance to navigate this nuanced process; and this broker should provide unemotional feedback and recommendations which are fact based.
Prepare for Emotional Reactions
Selling a business is an emotional journey, particularly for family members who may feel a deep attachment to what often represents a lifetime of work. Recognizing and validating each family member’s feelings usually eases the grief or change process. If it’s difficult to validate their reactions, try to find “the understandable part” about where they’re coming from and give them space to express. If these discussions become unproductive, consider bringing in a family dynamics coach or therapist to facilitate how the family is processing the sale together. It is often recommended that the owners and family members participate in a hobby to help dilute the stress of selling their business.
Develop a Unified Vision
Aligning on a common goal for the sale, such as financial security for the family or the continued legacy of the business, can unite family members. A shared vision provides a common ground and can help mitigate disputes about the specifics of the transaction. Your business broker should understand what values you want to find in a prospective buyer so that they can protect your desired outcome whether that be receiving top dollar, legacy or both, ensuring your employees keep their jobs, etc.
Implement Succession Planning Early
If the sale is part of a succession plan, engaging in this process early can smooth the transition. Training and preparing the next generation or new owners well in advance of the sale ensures a smoother transfer of responsibilities and can alleviate stress associated with the change in leadership.
Legal and Financial Clarity
Ensure that all legal and financial aspects of the sale are transparent and understood by all family members. This includes the valuation of the business, tax implications, and how proceeds from the sale will be distributed. Business Brokers, Legal, CPA’s, and financial advisors should be involved to explain the details and ensure that all parties are informed, and geographic implications need to be factored in (different states have different structural implications for how taxation will work, for example).
If you’d like to talk further about how to best prepare your family AND your family business for sale, reach out to Savannah Suttle or Seth Rudin.
If you have questions relating to the content of this article or the process associated with selling or buying a business in Washington or Oregon, Seth Rudin would welcome the opportunity to talk with you. Mr. Rudin is licensed to sell businesses & real estate in both Washington and Oregon. Mr. Rudin can be reached at (425) 454-3052 or seth@ibainc.com.
Further, if you have any questions relating to family business dynamics, organizational design or employee relationships, Savannah Suttle would welcome the opportunity to speak with you. Ms. Suttle can be reached at (206) 552-0333 or savannah@schemaconsult.com.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, accounting, legal, and financial planning communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.