Do you work with your family? Navigating business politics and family dynamics can be tricky, especially when it comes to succession planning and determining the future of your business. Below are some key areas to focus on when it comes to selling or transferring ownership of a family-owned business to the next generation.
Make sure to involve a valuation professional and knowledgeable tax advisor so you do not run into unintended tax events. Improper gifting or undervaluing assets can be an expensive mistake.
Because you are dealing with what can be an emotional decision, it is critical to have an attorney who specializes in M&A and has the temperament to work with family dynamics. Bedside manner can be what gets a deal done.
Allow plenty of time for the transaction, say not less than one year. It can happen much faster, but I have seen it go on for years. Because this is new territory for many of the parties involved, they need time to understand and absorb the vocabulary, process and choices. While this transaction may seem like a piece of cake to an experienced M&A professional, for those involved in the process for the first time, it is understandably more difficult. Compare it to the first time you bought a car or a house and how scared you were about the whole process.
In my opinion it is better to keep your family than lose it over a business transaction. Know what issues are important to everyone and, with a good advisor, you can hopefully complete the deal and still have Thanksgiving together.
You can also read more advice on family business & succession planning here.