Navigating towards a successful sale of your family business

Sale or Succession? - a Family Decision

For owners and founders looking to exit, the market for high-quality family businesses remains healthy. While higher interest rates have affected the valuations and the broader environment for selling a business, family enterprises remain attractive to the many buyers looking to deploy capital. Both strategic and financial buyers continue to look for merger and acquisition opportunities, not to mention the increasing role of family offices in the deals landscape as they pursue more sophisticated asset classes to preserve and grow their wealth.

You only sell your business once, and for many owners the sale represents the culmination of a lifetime’s work. For this reason, it’s worth putting in the time and resources to get it right and achieve all of your objectives.

Key steps include:

You know your business better than anyone, but valuations are often a subjective process, and perceptions will change depending on who’s looking at them and when. This means potential buyers for your business are weighing your company’s scale, strength, risk profile and expected earnings against the growth and risk dynamics of the market.

In order to make informed decisions, you’ll need to know your company’s market value range. That’s why it’s important to establish a baseline valuation as you plan and prepare for the sale process.

For the best results, allow adequate time to determine your key objectives and make sure you understand the sale process before going to market.

You should give yourself some time to think about and prepare for an exit, as there are various operational, human resources, commercial, financial and tax aspects to take into account.

You want a buyer who will offer the highest value for your business, but price should not be your only concern. Often, there are other key objectives the sale has to meet, such as the speed of the transaction, required liquidity, the sale price, and employee concerns. Finding the right buyer is only possible when you have carefully considered both your personal and business objectives.

If you want to maximise value, make sure your company has growth potential with some plans, like new products or geographical expansion, in the works to get buyers excited. Take a step back to look at your business from a buyers’ perspective: Are there sound plans in place to execute on your new initiatives, and what are your ideas, prospects and strategies around growth and innovation?

Every major change involves a period of adjustment. In many cases, especially when the buyer is a private equity firm, the deal will include a post-sale period in which the owner will remain involved to support the transition.

Succession

Sale or Succession? - a Family decision