You and your wife own a business. Like many of our clients, you run the operations while your wife does the books. The business provides full employment for one or more of your children, too.
Your dream has been to keep the business in the family—to see it continue through the generations that follow—a legacy. It’s what you’ve always wanted. And you thought your son and daughter did too. They never said otherwise.
But now, as you raise the topic of retiring by the end of the year, talking about the plans you and their mother have to finally see some of the world, they’re pushing back. Neither wants the responsibilities that come with ownership. They’ve seen the hours you put in and it’s not for them.
It’s a scenario that can tear a family and its business apart. But it doesn’t have to.
Here’s a real-life engagement transpiring in one of our offices now. The owners requested a valuation, in preparation for transferring the business to their son. But although their son wants to continue working in the business, he doesn’t want to own it. He’s happy with the lifestyle he has now—getting a good day’s pay for a good day’s work, with ample time to spend with his family. Our solution: sell the business to a qualified third party, with the continued employment of the son as a condition of the sale.
The reality is that intergenerational transfers tend to fail more than they succeed. I’ve seen it happen too many times—the older generation expecting the same work ethic and discipline they’ve applied throughout their work life colliding with a younger generation unwilling to work as hard as they’ve seen their parents do or rejecting parental training for skills they need to improve on. Sons and daughters often have very different aspirations for their own future as well.
Consider, too, that many owners count on the money from the transfer of their business to help fund their retirement. If their son or daughter or other relative takes over and messes up, their retirement money is at risk. Knowing this can be a constant source of worry.
In such cases, selling the business to a qualified third party and thereby providing cash to serve everyone’s needs may well prove much better than the friction and worry of having family take it over.
As a seller, you want to ensure the continuing success of the business, the fulfillment of the buyer’s contractual obligations with respect to financing that you have provided, and his or her ability to maintain employee, customer, and supplier satisfaction after the sale.
Using a certified business broker to locate and sell your business will minimize your risk.
Take the first step.