For many entrepreneurs, the family business is more than just a source of income; it’s a legacy and a significant part of their family identity. However, there comes a time when the best decision for both the business and the family is to sell it. Making this choice can be difficult, but recognising the signs that it’s time to let go is essential. With Business Brokers, we will explore these signs and discuss why hiring a business broker can be a smart move when selling your family business.
Signs It’s Time to Sell Your Family Business | Business Brokers
Many family businesses that close their doors do so primarily because they lose their competitiveness in the evolving business landscape. Selling the business can inject fresh capital, enabling additional hiring, expansion, or the adoption of new technology. Financial considerations may also arise from acquisition prospects. If your family business receives an acquisition offer at market value, potentially yielding significant returns for company shareholders, it might be a wise move to seize this opportunity. If the offer promises to enhance growth potential and multiply profits, accepting it and exiting your family-owned company could be the ideal decision.
Ownership or Leadership Issues
Family business owners often make the error of appointing too many leadership positions to family members, believing it’s easier to trust their own kin than to hire external individuals and build trust gradually. However, trusting a family member doesn’t guarantee they possess the qualities of a competent manager or leader. Placing family members in inappropriate roles can prove detrimental to your business, leading to internal tensions. A successful sale of the business to an external party can naturally alleviate this conflict, as decisions regarding leadership positions will primarily rest with the new owner.
No Succession Plan
Families naturally evolve over time, with changing interests and skill sets spanning generations. In some cases, families grow apart, and their ability or willingness to continue supporting the family business as owners or leaders diminishes. The absence of a viable succession plan can lead to uncertainty and internal conflicts. When there is no qualified family member ready to assume the business’s continuity, it becomes important to contemplate a sale. Moreover, if you’re approaching retirement and lack a clear plan for transitioning your business, selling it can offer a valuable source of income for your retirement years.
External Market Changes
All businesses undergo lifecycles that can vary depending on factors like technology, management capabilities, and financial resources, influencing their ability to compete effectively within their respective stages. Businesses may lose their competitive edge for various reasons, including mismanagement, insufficient reinvestment, or the disruptive influence of new technologies that either reshape or undermine entire industries. If your business is grappling with challenges in adapting to these shifts or contending with heightened regulatory changes that impact profitability, it may be an opportune moment to consider a sale.
In family-run businesses, it’s almost inevitable to encounter family-related issues. Persisting with the operation of a family business amid internal disputes can endanger company operations, and hinder progress and growth. If the strain of ongoing disagreements with family members leads to burnout, negatively impacting both the business and your personal life, it becomes essential to prioritise your relationships with them over their involvement in the business.
Hire a Business Broker Today
Selling a family business is a major decision that demands thoughtful deliberation. Identifying the indicators that signify it’s the right time to sell is the initial crucial step. Engaging a business broker can be a game-changer. Business brokers are instrumental in streamlining the sale process and ensuring the preservation of your family legacy. If you’re contemplating the sale of your family business, you need not look any further than Business Brokers. We handle every aspect of the sale process, spanning valuation, marketing, and negotiation, enabling you to proceed with confidence. Contact us today, and our seasoned business brokers will be delighted to assist you.