The Pros and Cons of Selling a Family-Owned Business

How long can a family business thrive? If you believe an old piece of conventional wisdom, it’s not past the third generation.

That saying comes from a study that found 70 percent of family businesses will either fail or be sold off by the second generation, while only 10 percent will make it to a third generation.

While some analysts now dispute those findings, they do capture something fundamental about running a family-owned business: difficult to achieve prolonged success, and the decision of whether to sell or pass along the business to the next generation can be fraught.

At Symmetrical, we regularly consult with business owners who are thinking about selling their family business and help them come to a decision that’s best for them. Here are some of the pros and cons of selling a family-owned business.

Pros: Resources, Longevity, Succession

There are plenty of benefits to selling your family-owned business. A sale to the right company can provide your business with greater resources, helping it grow in a way that might not have been possible had it stayed within the family. A sale often leads to more security and longevity, ensuring that the company you’ve spent your life building remains in good hands for years to come.

While selling a family-owned business is undoubtedly a big change, it’s also worth remembering that a sale doesn’t necessarily mean your family gets removed from the business entirely. Many buyers actually value keeping family members involved after a sale, tapping them for their expertise.

Another underrated benefit to selling the business is that it can eliminate any thorny conflicts within your family over who will take the reins of the business. Save the Succession-style conflict for the TV!

Cons: Loss of Control, Culture Change

One of the greatest advantages of owning a family business is the freedom to make your own decisions. Frequently, it takes time for business owners to feel comfortable giving up control.

Similarly, selling a family-owned business can produce legitimate concerns about disrupting the company culture.

While these are both valid fears, it’s worth mentioning that they aren’t necessarily reasons not to sell. With the right planning and by ensuring the buyer is a good fit, you can feel confident that the new owners will share your business philosophy and retain the key components of the corporate culture that made your business a success. That’s why picking the right partner is the single most important factor for the success of any merger or acquisition.

There’s no denying that selling a family-owned business constitutes a major change: for your family, your employees, and the future of the business. Our team at Symmetrical has years of experience navigating the sale of family-owned businesses, and we can help you make the right choice. Get in touch with us today to learn more about how we can offer guidance and ensure that, if you do choose to sell, the transaction will be a long-term success.

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