The Family Business -- Finale

In the last few weeks, I've been discussing what to do with your family business, specifically focusing on the issues inherent to passing the business on to your family members. Today I'll go through a few of the remaining issues to consider.

1. (If you're selling) Should you sell for cash to your family or owner-finance? As a practical matter, your family will likely be unable to pay for the business unless you can owner finance. If you really want to cash out, you'll probably need to find an arms-length third party buyer.


2. Should you stay or should you go? One issue to consider is, when you convey your business to your family, should you request or offer to stay on in some limited capacity (e.g., as a part-time employee, a consultant, etc.)? When selling your family business to an outsider, the buyer usually should have a desire to keep you on, if for no other reason than to (1) help retain the business's good will and (2) create a smoother transition period.


Family businesses offer different dynamics, however; no matter how much you love your family, can y'all work together?

Anecdotally, from my past experiences, most parents do not stay on after conveying their business to their children. I suspect that, by the time they hand it over, they're ready to see if the business can sink or float on their children's efforts, and quite frankly know that they would drive themselves (and their children) crazy if they hang on and offer advice. A small exception to this, however, is that some parents I've seen stay on as "consultants" (usually, at most a nominal title) so that they're able to stay "employed" by the business and keep some type of needed medical insurance.

3. Anything else I should consider? Most likely, but your business is special, and it's unique to you. One of the joys of my practice is that I've learned the quirks and specialties of numerous small business, as well as the idiosyncracies of each of their individual owners. No two businesses--even within the same industry--are alike, so you need to make sure you're represented by competent tax and legal professionals. Preparing a succession plan for your business will only happen once in your lifetime--make sure it's treated importantly. If you would like to talk further about your specific situation, contact me at 704-735-0483, and set up an appointment.