After a long stint serving as the leader of the family business, you may decide it’s time to sell. It may be an emotional time, or just business as usual. Still, selling a business brings forth many considerations and questions.
Consider how the business is owned. Is there one owner (mom or dad, for example) or is the business held by a family trust? Does anyone else need to be a part of the decision making process? Once the final decision is made, it’s time to consider the details of the sale.
Do you want to sell the family business to a stranger or a family member? Either way, the first thing you’ll need to do is determine the value of the business. Sometimes that’s difficult, depending on the type of business. Ultimately, the valuation may be more of an estimate. Consider the value of the business assets, including inventory. Review the company’s books and accounting records. What does the profit and loss statement say? Take a look at current and forecasted revenue and expenses. Consult with CPAs and attorneys.
Along the way, the owner and buyers may reach agreements that should be memorialized in written contracts or letters of intent. Have an attorney review any documents before signing them.
Knowing the best time for selling the family business is also important. Is the market hot right now? Is it a buyer’s market or seller’s market?
Also consider if there are any internal considerations that may make you accelerate or delay your sale. Are key employees about to retire? Is the company already facing any major changes?
Review your business succession plans to make sure a sale is even allowed. Will any other estate planning documents be affected by a sale? Will the sale necessitate a review of your estate planning documents?
Make sure your business plays a part in your estate planning. John Mangan is an experienced Florida estate planning attorney who has been board certified in Wills, Trusts & Estates by the Florida Bar. At Law Offices of John Mangan, P.A., we have developed business succession plans for business owners across the state of Florida. Call us at 772-324-9050 to set up an appointment or use our Contact Form.