- It might just be the right time to sell.
A family may come together and realise that succession might actually be cashing in on the successful growth of the business, passing the business on to someone else and to take the proceeds and split it among the family to pursue new and different ventures.
It can be hard for a family to acknowledge, but the fact that a business has been a family business does not mean it always has to be the same family business, different generations and different dynasties can be started from the proceeds of a previous one.
Who to sell to
Having determined to sell the business the key challenge is then who to sell to? The market available will depend on the industry and the sector to some extent, but it is also fair to say that any successful business, particularly in the case of family businesses, which are often those with an interesting history and backstory, are likely to have a number of routes to sale.
So, a family business looking to sell would do well to think about who to market to. Is there a competitor or other trade buyer who would be keen to acquire the business? Is it a market that private equity is interested in and might want to back non-family management in taking over the business?
Or, more commonly than ever, is there a family office or wealth fund interested in the business? The challenge here is – if there is not an obvious buyer – to get good advice.
Retaining the services of a good, well-connected corporate finance adviser who can access the different possible buyers and who knows who is interested in making acquisitions is vital.
They will also be able to help value the business and ensure the price holds up through the sales process, and be an important part of any sales team. This is particularly true if one area of interest is accessing family offices, as there is no single place to access this source of funds and buyers, and having a well-connected team around you will be crucial.
Be aware of what the business is. In the case of a family business, this is not just the fact it makes widgets, this is the whole history of the business, its role in the community, its back story and what it has become. It makes the pitching of a sales opportunity easier if you get behind the numbers and paint a picture of what the business is about.
You should be prepared to answer questions about environmental, social and governance factors, and be able to tell the ESG story of the business.
