Selling a business is more than just a financial decision — it’s also an emotional decision, one that can overwhelm even the most seasoned business owner. When you’ve owned and run your own business, it becomes a part of your identity.
You’re not just selling the company, you’re letting go of a part of yourself.
Your team of advisers can help guide you through the steps necessary to prepare for the financial ramifications of selling a businesses. But you also need to pay special attention to the personal impact of selling a business.
Perhaps the most important factor to consider is the effect that the sale will have on your family — particularly if any of your children work in the business. How involved will your family be in the transaction? Will they personally benefit and, if so, are they ready for that responsibility? Should a governance plan be put in place to protect your family from this wealth?
Preparing your family for the money
The best way to ensure that children and grandchildren are able to handle their family’s wealth responsibly is to get them involved in its management, provide them with financial education early and help create a forum in which they can make decisions together.
Begin by holding regular family meetings to define current needs, discuss common values and a vision for future generations. Make sure each family member knows his or her role and responsibilities and is willing to work together to come to a shared sense of risk and reward. You will also want to involve trusted advisers and fiduciaries that you have appointed in these meetings.
Ideally, these discussions should start long before the sale of your business and address important questions, such as your lifestyle as you grow older, your charitable goals and how much you’ll want to leave your children and grandchildren.
An important conversation
The answers to these questions will help drive your family’s wealth management strategy, which in turn will influence the type of deal you strike when you ultimately decide to sell your business.
What you learn in this process may help you answer more sensitive questions, as well. For example, you may need to decide whether a child who was active in the business should have a greater share of the profits than a child who was not interested in participating.
While the decision is up to you, the meetings may provide additional context for your choice and give you the opportunity to be transparent about your thinking on the matter. Failing to address such questions in an open and honest way could be an impediment to sustaining family wealth and promoting family harmony.
Outlining these objectives can be difficult, but diligent preparation in the present can set up smoother transitions in the future. ●
This material is not intended to constitute legal, tax, investment or financial advice. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation. Trademarks and logos belong to their respective owners.
Ron Ambrogio is Ohio regional president at BNY Mellon Wealth Management