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The final frontier: Selling a family business

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If you decide to go where others fear to tread, and if this road is one taken with purpose or due to pushes and pressure, it will help to know what monsters and angels you may face on the journey.

One of those perilous journeys is selling a family business.

Be aware of one thing: how ever long you think it will take, it will take twice as long. Deal times, from instruction of a corporate financier to completion are now up to 12 months. An awful lot can happen in that period; good, bad and absolutely catastrophic as markets remain as volatile as Mount Etna.

Deals roll from pillar to post; tempers and tantrums, tears and smiles become the norm.
Oh, and all the while you have your day job to do as it’s absolutely certain that the deal is not done until the money is in the bank.

Making a purposeful decision to sell as opposed to having no choice may seem a different route, but in fact the road map has quite a few similarities.

The starting point

No heirs, no one willing to take over, or no one suitable could force a sale, but equally poor or great performance may present opportunities or options that mean exit is the only route.


1. Check your shareholders agreement

Can you sell with or without all parties consent, and if you haven’t got the requisite votes, what are you going to do?

2. Value

Do all parties agree on minimum figures, and do they understand the reality behind them, or are they delusional” Get professional guidance on this. You cannot second guess value. I have sold businesses where I have had offers ranging from £1m to £5m for the same company.

3. Who is going to do what in the process from an internal point of view? 

This is very distracting. Parading to various buyers, you need your best salespeople on show, and your best money-man or woman. These may or may not be family members. Think of it as selling a house: you need to present it in the best possible light and that means putting the toys and the dogs out of the way, and brewing some fresh coffee.

4. Get your house in order

Books, records, customer and employment contract sorted and get rid of. Or, at least be aware of anything nasty, so you can be ready if challenged.

One client, against all my advice, underplayed the final salary pension scheme issues. In due diligence this came back to haunt him. In order to get the deal away, he had to accept a larger-than-needed chip to the price as the buyers threatened to walk, and there was nowhere else to go.

5. Be 1,000,000 per cent certain you are committed to the sale at completion; this is going to feel very strange

You may feel guilty and hugely remorseful; certainly it’s not sold until it’s sold, but once pen is on paper on the sale and purchase agreement, it’s too late to reverse, so have a plan for the new you and the new family.

Probably one of the most painful experiences I have had in the arena was with two brothers. Second generation, no heirs and a hugely successful company, approached by a large privately owned company with a life-changing offer, they set off on the sale process.

One of their personal vital sales requisites was to sell to someone who they believed would carry on the legacy, and another family company fitted the criterion well.

Shortly before completion, the buyer announced they were subject to a takeover by a large multinational, and they would still like to carry out the transaction.

The brothers were faced with a terrible dilemma; 12 months of negotiations, and two weeks away from completion they had spent the money in their mind, bought the toys and gone off into the sunset.

No big bad evil corporate loomed.

They sold, by the way but I know for a fact it’s haunted them as their 60-year-old business was absorbed into oblivion. Something, they tell me, mum and dad never let them forget.

The process

Yes, you can do this yourself. But if you are busy now, imagine doing another full time job – that is what it is.

If you take your eye off the ball throughout this process and the deal falls through, you may not be able to go back to the same business.


1. Get the best adviser you can

They may not have your industry experience but that’s not relevant. What’s important is that they understand your deal size and your family. You must like them – you are going to be spending a lot of time with them and you must listen to their advice. 

They have probably seen this one hundred times before, and I’m afraid to say it’s a bit of a game for some large corporate teams. They use it to score points and look good, and all with your inheritance, so you need someone who will fight your corner and come out with a good and fair deal. This is particularly important if you have to work an earn-out to get the cash value you need, as they need to be the bad cop to your good one.

2. Keep a private life

The process will feel rather full-on at times, and it’s essential to keep a sense of balance. A sensible personal life is essential to maintain your sanity, so steer away from Sunday lunch table debates.

3. Have an essential list of no compromises

About half a dozen items and no more. This will help you and your adviser steer the deal and cope with the inevitable brinksmanship.

One deal due to complete on December 23rd hit trouble when the buyers announced at completion a desire to drop the purchase price by 15 per cent. When asked why, they had the audacity to say, “because we can.”

They mistakenly had chosen their wrong adversary as my client had been well versed in this tactic, and we all folded our papers and walked from the room without a word.

Chased to the car park, now nearly 3am in the morning, the buyers insisted on knowing what we were doing.

We all left and I can tell you we all had a very poor Christmas.

Sure enough, early January the deal was back on and completed, but it was the clients’ fortitude and their aid memoir that gave them the confidence to stand firm.


Whatever date you were given, it will never happen. The corporate finance calendar is not the lunar one, rather the loony one, August and December, little if nothing happens. Remember, if anyone can ruin a great commercial deal it will be the lawyers, so keep them on a short lead.


1. If it’s a cash out deal you may still need to do a perfunctory hand over

It’s going to feel very strange going back into the business, even for a short time. Be prepared and then get away as soon as possible.

2. If it’s an earn-out, every day will be hell by and large

I have yet to meet anyone who enjoyed this process and it will be the little things that get you; the change of brand, the change of long term suppliers and advisers etc. Stand back, concentrate on the end game and make sure this process is as short as possible.

3. Have another life planned

You may not believe it but you will soon get bored with the lotus eating life if you have been used to manic. Most people last a year at most.

I hope this has given you a small insight into the pros and cons, and that he who cares is likely to win.

Jo Haigh is head of FDS corporate finance services and the author of “The Financial Times Guide to Finance for Non Financial Managers”.



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