Every business has a life cycle. This growth and development need a variety of ingredients – new investment, new ideas and new collaborations. If it is no longer possible or desirable for the family to continue to lead the business, then they are likely to consider a sale.
There are many occasions when the family or its dominant member may wish to sell the business. There are a host of potential reasons for this: a desire to close a chapter and reap the benefits or an acceptance that family ownership is no longer viable for the business to thrive. When this occurs, a process is initiated with the hope that it will be cohesive and that all of the stakeholders are proceeding with a common goal. The issue is where there is disagreement.
A family constitution and well drafted shareholders' agreement is vital: not only must they be put in place at an early stage where parties are still in agreement; they must be reviewed and updated regularly.
Tools such as drag and tag provisions in a shareholders' agreement will help focus the minds of the stakeholders, but they must go hand in hand with good independent advice, especially when these tools need to be put to use and present a real source of anxiety for potential buyers. Investment bankers, lawyers and accounting experts can help soothe frayed relationships, provide independent objective advice, protect value and mitigate risk.
The sale of a family business is not an end, rather a new beginning for the business and all that rely on it.
Upon a successful sale, those family members who have been running the business and/or managing the sale will find a sudden and fundamental change in daily patterns. This is not the time to be making vital investment decisions. Decompress and give yourselves the time to think and take proper advice.
The family must reflect and with the help of trusted advisers devise a strategic plan for the administration and management of the new liquid wealth.
How we can help
We have extensive experience advising family businesses at all points in their lifecycle, including through the process of transition to the next generation.
We can assist with reviewing existing governance arrangements and ensuring that they are fit for purpose, providing stewardship and governance training to existing and incoming family management, and acting on your behalf as an intermediary in the context of discussions regarding the future of your business.
We are also experienced in advising on corporate and business restructurings, including with respect to the tax.