There are two kinds of ownership in a family enterprise. One is tangible- that’s the stock in the entity. The other is intangible. It’s the emotional connection based on history and legacy. We’ve found that this latter kind of ownership is much more challenging to relinquish. In fact, more than one acquisition advisor has told us of the horror story of a failed closing when, at the last minute, Aunt Bertha is about to sign the final documents only to suffer from a severe bout of seller’s remorse citing her inability to let go of grandpa’s legacy.
All too often, when thinking about selling the family business, family members focus almost entirely on price and terms and timing. For sure these are critical to a potential transaction, but so, too, are what are typically called the “soft” factors. These include the culture and values of a potential acquirer, the impact on all stakeholders- family member shareholders and family and non-family employees, suppliers and customers, plus that all important look into the future and a glimpse into what lies ahead.
How do you manage those “soft side” factors? Perhaps the best way is to anticipate them. It’s like living “Murphy’s Law” in advance. Once you anticipate the concerns of others and what might prevent a transaction, you are able to also anticipate action steps that can be taken to obviate the issues.
Among the most important “pre-steps” to the sale of the family’s business is looking at what comes next for the principals. Is it the oft dreaded “R” word? Is it devotion to a life of grand-parenting and leisure? Is it the world of philanthropy or a new career? As a good friend and colleague once told me, “Unless you know where you’re going, you’ll never let go of where you’ve been.”
So, as you think of selling the business, look beyond the numbers. Consider the impact of a new culture. Anticipate the soft side obstacles and give ample time to exploring the next stage for your life. Even if you’re on the 14th hole, there are still some more birdies to be had.
David Karofsky is President of Transition Consulting Group, Ltd. He has over 20 years of experience coaching executives and working with companies across the globe to excel, grow and outperform their competition. The recipient of multiple achievement awards, he received his A.B. from Bowdoin College, an Ed.M. from Boston University in Counseling Psychology and a MBA from Northeastern University. David can be reached at [email protected] or 508.875.7751
