This is a complex issue. The right people to run the company when the present ownership retires might be the adult children of the owners. Or, some of them may not have the right skills or the interest in the company. Maybe the right person to take over as president of the company is a key employee who isn’t a relative. Or, perhaps another company or set of investors might find value in purchasing your company.
We could list an endless list of scenarios. However, the big question remains, what comes next? The vast majority of family-owned businesses don’t last to the second generation, much less the third generation. Even in the best businesses, making the right transition requires serious conversations and hard questions.
A strong team of advisors is crucial to making this transition. A business attorney can help make sure the company’s records are in good order so that even an unexpected purchase offer can be readily considered. Your company’s CPA can help ensure proper financial records are kept. If the company is large enough, having an experienced CFO will help put the financial house in order, or engaging a fractional CFO on an ongoing basis can provide the same value. Investment bankers and business brokers can also be part of the answer.
Getting a company ready to sell an be a lengthy process. There are sure to be both personal and financial considerations. Today is a good time to start having these conversations.
Below is a link to a very useful article with some great questions built around a real-life situation. It’s worth your time to read: