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One of the toughest decisions anyone in a family business will
have to make is deciding who will take over the business when the time comes.
Often times, this is where conflict arises. What if there isn’t a second
generation to take over the business? Or maybe there is a second generation but
they aren’t yet ready to the take over the business. What do you do?
Here are some options and scenarios, provided by US News, from
family business consultants to consider if this happens to be a decision your
business needs to make.
If there is no "next generation" to take over:
- Sell to Employees. It is best to try and sell the business to people who work for you if there is no one to take it over.
- Sell to a Third Party. If no one within the company wants to purchase the business, sell it to a third party. In this scenario, you would sign an agreement of sale, or an asset purchase agreement.
- Create an ESOP (Employee Stock Ownership Plan). An ESOP provides every employee with stock ownership in the company and is essentially a type of pension plan. Although this takes care of the monetary side, an ESOP won't solve the problem of who's going to run the company after you leave.
If you don’t think the next generation is ready:
- Assemble Advisers. You might not think the next generation is ready to take the reins, but you're not the most objective person to make that decision. Hire a team of advisers, like Continuity Family Business Consulting, to assess the situation and evaluate the younger generation's readiness. Advisers/Consultants don't advocate for either generation, but advocate for what's best for the business. It's a perfect balance point between the needs of the generations and the needs of the business.
Is your family business ready to sell? Do you have a generation
lined up to takeover? Tell us on the Continuity Family Business Consulting Facebook page, linked HERE.
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