Managing family member expectations is key to a successful company sale
Recently a company owner called and said he tried to sell his company but after telling his two sons that he had accepted an acquirer’s offer, the two boys quit. They quit because they felt blindsided that their father never spoke with them about exit plans. This caused the acquirer to back away given the important role the two sons played. The owner was now looking for help to reset his attempt to exit.
Key to a future euphoric exit event is preparing your business and yourself personally. Part of the personal equation includes family members that may play roles in the running and/or owning of the business. If you’re the owner of a company and have family members working at the business or with ownership stakes, ask yourself these questions:
- How might my family members, who are working in the business, react to my wanting to sell?
- Will my family members who are working in the business want to leave when I do or will they want to stay and work for the acquirer?
- How will family members, who don’t work in the business but who do have an ownership position, respond to my wanting to sell? Does their ownership position give them voting rights in a sale?
- Would any of my family members be capable of taking over the company from me? Would they want to? Are they expecting to take over?
- Have I spoken openly with my family members to share my thoughts related to a future exit and solicited their thoughts?
- Have I talked with family members about what a sale of the company might mean for them and solicit their thoughts?
- Would it be an exit option to have members of my family, who are working in the business, acquire my portion of the company? Could we structure a way for family members to purchase my stake in the company?
Use time as a friend in communicating effectively with family members to prepare for your future exit event. Don’t get close to exiting only to find out that this topic hasn’t been effectively addressed. Selling a company is stressful enough without adding the unnecessary pressure of dealing with family members that have not been well prepared along with you. Start that dialog today and get any issues on the table so you can manage them now and not while also trying to sell to an acquirer.
