Inheriting A Family Business: Should I Sell?

It happens all too often. A family-owned business is at the juncture where the owner is retiring, facing health issues, or has unfortunately passed away. However, the inheritor(s) in line to take over the company either already have their own successful careers or simply do not have the interest or passion to assume the job. Instead of taking the time to find a solution for the health of the business, they just let the business fold. This is sad for many reasons, including the fact that you could have made a pretty penny by selling the company to the right buyer, but especially for the many employees who counted on that business to keep them employed and help them support their families.

If your family owns a business and you are expected to take the reins, it can be a difficult decision if you see a different path for your future or if you are just not motivated to take on the task. It’s normal to feel guilty if your heart is just not in it, but it is important to remember that you should make the decision that is in the company's best interest. And that could very well mean selling it. After all, it’s better to put the business in the hands of a new owner who truly cares about maintaining and growing its success rather than letting it dwindle into its ultimate demise.

So, how do you know if you should sell? There are many factors to consider, both personal and practical.

Are you passionate about leading the business?

This is the most important question to ask yourself, above anything else. Your attitude regarding the company will significantly impact its health, including everything from the day-to-day operations to the overall culture. Suppose you feel lackluster or disinterested when it comes to running the business and maintaining its success. In that case, it may be a better idea to consider a partial sale, a merger, turning it over to a trusted employee, or even a total acquisition to safeguard the company's well-being and what it means for your employees.

How healthy is the business?

A healthy business should not have any problems paying the bills. But if your family-owned company is already struggling to stay afloat and pay the bills as you are positioned to take over, you may want to consider a strategic sale or at least the help of an investor to take the weight off your shoulders to turn things around.

This also applies if it’s just a matter of out-of-control costs. If your operating costs have become excessive, you may need to refocus resources to help bring them down. This could mean outsourcing, adopting new technologies, eliminating redundancies, or finding inefficiencies. Anything you can do to lower your costs will improve your bottom line and lead to a healthier company. If you cannot find ways to cut costs, you should consider an outside investor or even a merger or acquisition to get the business back on the right track.

Waiting to sell? Don’t miss out.

Another factor to consider is the business’s growth potential. A solid business should constantly be growing. Innovation is critical when it comes to staying ahead of the competition. Maybe you think everything is fine the way it is, so you don’t need to change anything. This way of thinking is destined to fail eventually. But if you are trying to create growth and not getting results, you may want to seek the help of an investor or join forces with another company through M&A strategies. The right investor can bring valuable expertise along with essential connections that can help you improve supply chains, come up with fresh marketing ideas, and fulfill other specific needs.

Do you have high employee turnover?

Retaining key talent and keeping them happy is important for your business because hiring, training, and re-training employees are both time-consuming and costly, especially if you must keep doing it repeatedly. Take a close look at the pulse of your business, your employee morale, and how much turnover is taking place. If you see a problem with high turnover rates, you need to act immediately to identify and address the issues causing the situation. It can take a long time to reverse course, which can result in long-term damage to the business. If you do not think you can fix the problem, the outside help of an investor may be the answer or even a sign that you should consider selling the business to someone who can.

What if the company is doing quite well?

Sometimes, the ideal time to put your company on the market is when it is thriving. This means you can get the most value out of a deal when the business is at its most profitable levels. Buyers want companies that are profitable and indicate a strong future. If you are not interested in or passionate about taking over the business, but it is actually doing well, you should definitely consider selling. If you don’t, you could be missing out on millions of dollars.

We can help.

Our highly regarded M&A experts at Benchmark International are here to help you with whatever is best for your company, whether it is creating growth strategies or designing a complete sale with the right buyer that gets you maximum value and puts the company on the path to a bright future. 

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