Should You Transfer Your Business To a Family Member?
05.10.19 Part One: Personal and Emotional Issues - Question & Answer #5
Question: Should you transfer your business to a family member?
Short answer: When it comes to family, the answer is never simple.
Does your family want the business? Does your family member(s) know how to run the business, have they developed the right skills? These are fundamental questions when regarding the transfer of your business to a family member.
Many business owners dream of transferring their lives' work to their children, this dream has worked successfully on many occasions but dealing with family members in a business relationship is one of the toughest challenges faced during a business transfer. Your family members have already experienced all the inherent tensions that exist between co-owners. Coupled with a lifetime of family dynamics and the day-to-day pressures of running a business is a recipe for disaster.
The same logic used in selling your business to key employees should be utilized in this scenario. If your child can afford to buy you out and pay top dollar without using any of your money and after closing, you believe that you can remove yourself from the fear that your child is ruining your company, then sell to your child. On the other hand (here is where you must be honest with yourself) if you know you are always going to worry whether or not your child will be successful or not, then do yourself, your child, and your family a favor and sell to a non-related third party.
You need honest and caring communication, ask your child, don't assume that your child wants to control and operate the business, remember your business was your dream and may not represent your child's dream. If your child doesn't want to own the business and would rather be doing his own thing, then consider selling to a third party and take a part of the sale proceeds and invest in a venture that your child wants and has the passion like you had when you started your business.
If you would like the complete answer containing scenario examples, please reach out to MB Law at email@example.com to request your complimentary copy of "Deciding To Sell Your Business, The Key To Wealth And Freedom," that has over 50 questions & detailed answers.
Other Articles Relating to Transfer of Your Business:
Seven Steps To a Successful Business Transition
Should You Sell Your Business To a Key Employee or a Group of Key Employees?
* This information is for general purposes only and is not intended to constitute any specific legal advice of any type.