Many family business owners in North Carolina have dreams of handing off the reigns to future generations. For times when a clear successor who happens to be a relative isn’t available, however, owners of family businesses may explore options with outside buyers. Successfully completing this process can present some challenges. According to the Family Business Institute, failing to take outside considerations into account and technical missteps are among the most common issues that may complicate family business ownership transfers.
There is no standard timetable with buying and selling businesses because of the many factors that can affect either process. With selling a family business, it can be wise for owners and other family members to start planning for the adjustment a year or two in advance to allow time to prepare emotionally and strategically. This may include taking steps to increase the businesses’ value by securing contracts with vendors and strategic partners, streamlining balance sheets, and setting up any long-term leases that may be required for business-related real estate.
From lump sum transactions to securing a percentage of future profits (earn-out), there are many possible ways to complete a sale. Family business owners are often advised to consider financial needs and potential tax implications when determining which option is right for their situation. Selling a business can also lead to a need to make well-informed decisions related to newfound wealth, such as diversifying investment portfolios and setting up trusts to protect assets for family members.
With business transactions involving family businesses, a lawyer sometimes assists with sizing up available assets when preparing for the sale and evaluating potential buyers. A business law attorney may negotiate contracts that clearly establish the roles and responsibilities of all parties, including any vendors or partners who might remain part of the business after ownership transfers.