Every business has a life cycle. For some this can be short, others can last generations. The key is how it evolves and adapts to its environment and the needs and resources of its stakeholders.
A family business is no different, save that its ownership and most likely its management are related and bound by history, tradition, emotion and – sometimes - competing priorities.
Why sell? There may come a time when the business needs investment beyond the resources or appetite of the family, or there are no obvious successors to take the reins. It may even be that the family wealth could be better invested elsewhere, or the family may prefer or need to sell realise the gain and pay tax from proceeds rather than wait and face large inheritance tax bills, with no cash available to fund this.
Selling a business owned by multi generational family members can be tricky. A buyer has to see the sellers as cohesive and focussed. There is nothing a professional buyer likes more than to divide and conquer.
A family constitution and well drafted shareholders' agreement will undoubtedly help: not only must they be put in place at an early stage, and they must be reviewed and updated regularly.
These documents can provide tools to focus the minds of the stakeholders, but they must go hand in hand with good independent and trusted advice. Investment bankers, lawyers and accounting experts can help manage the transaction a present a singular united front. They can also help manage family relationships, by providing independent objective advice, and importantly they can help protect value and mitigate risk.
The sale of a family business is not an end, rather a new beginning for the business and all those who rely on it.
But what of the family? Following a sale and a well-earned rest! the family must reflect and with the help of trusted advisers and devise a strategic plan for the administration and management of the new liquid wealth. At this stage the family business has gone but the business of the family remains
How we can help
We are very experienced in advising on corporate and business structures to help maintain the business and preserve family wealth.
We have extensive experience advising families and their businesses at all points in their lifecycle, including through the process of transition to the next generation and/or sale.
We can assist with creating or reviewing governance arrangements and ensuring that that are fit for purpose, providing stewardship and governance training to existing and incoming family management, and acting as an intermediary in the context of discussions regarding the future of the business.