Selling A Family Business
By James R. Vann
Vann & Sheridan Video Legal Pad
Hi, I'm James Vann and welcome to this session of Vann & Sheridan's Video Legal Pad. Today we're going to talk about selling a family business and the preparation that you need to take prior to entering into that arrangement to sell the business.
If your family business is much like many others, you've put a lot of blood sweat and tears and many hours to create the business, to grow the business and it's, quite frankly, part of your family. So we realize that when you're selling a family business there is an emotional aspect as well. Beyond the financial, beyond the legal issues, part of it is a little bit of an emotional thing because you've actually grown that business with a lot of work. So, some of the things that we try to help our clients with is to make sure when they're getting ready to sell that business that we've talked about: Are you ready to make that transition? Are you ready to move out of the office of whatever you hold; The president, the vice president, the chairman and move to a role that is not in that kind of a leadership role.
So the first piece is certainly the emotional aspect. The second is, determining what kind of goals you really have in selling that business. Are you looking to cash out of it or are you looking to transition over time? Are you looking to totally get away from it and not be involved in the business at all? So really to sit down and look at what your goals are as you're preparing to sell that business is very key. The third thing we talk about is cleaning up that family business. Not that family businesses are dirty by any means but what happens is there are lots of advantages with a family business and part of that is you get to enjoy some of the "toys" of the family business. A lot of experts will, when they write or talk about this issue, they say that you have to get rid of the extra toys, things on wheels, that kind of thing. You have to think about the perks; tickets to sporting events, extra vehicles that may be used by the family but are owned by the business. So you've got to think about cleaning that up as well as cleaning up the financials.
Sometimes obviously there are issues on the financial side of the business that are advantageous for you as the current owner but when you go to sell that business, some of those financial pieces probably need to be cleaned up because the buyer is going to want to see a little bit tighter financial situation that you may currently have. The other advice we tell people is to start talking about your C.P.A., your lawyer, even maybe your banker and some kind of an investment person because what that's going to do is it puts the people, the team, together to let them help you in preparing for that sale. Quite often you know how that business needs to be sold, maybe the potential buyers of the business, but you really also need people around you to help, sometimes maybe to narrow down the issues and tell you the truth that, you know, maybe we need to take this approach in selling the business versus that one. Putting a good team together is a great aspect of selling your business. If you have questions we hope you'll give us a call. Thank you so much.
