Keeping the Business in the Family – A Cautionary Tale

The stories written by the children who bought family businesses should be mandatory reading for all business owners.http://www.profitpath.com/wp-content/uploads/2013/08/iStock_000016746886XSmall.jpg

Let’s face it, the successors have a unique perspective. They’ve seen what does happen, not what might happen.

For example, a young Australian woman – let’s call her Alex – was told by her father that he had only 12 to 18 months to live. Would she buy the family business?

She, of course, said yes. Most of us would have done.

The company printed “What’s On in Sydney” and distributed it through every hotel in the city. Over the years there had been offers for the business, but they hadn’t met her father’s valuation so he hadn’t taken them.

Alex was a successful freelance writer. She’d never run a business and, until her father announced his illness, had never shown interest in the family one.

She co-opted a brother to redesigning the magazine, they built a web site and her father introduced her to all of her advertisers. And she got to spend 2 or 3 days a week with her father as he taught her the business.

But, after a few months, Alex realized that, while she loved writing, she hated selling advertising so much that she couldn’t keep on doing it.

And she had to tell her father.

So, one day a few weeks before he died, Alex called him. She felt devastated, that she had really let him down.

Soon afterwards he was admitted to palliative care.

With her father’s business partner, Alex found a business broker and put the business up for sale just before her father died.

What’s to be learned?

1.  Her father had passed up opportunities to sell the business because he was stubborn about the valuation that he wanted. He should have compromised. In these circumstances the company probably sold for less than it would have done had the sale been well planned.

2.  Alex responded with emotion rather than logic when asked to buy the business.

3.  Would things have been different if her dad had brought Alex and her brother into the business earlier? They could have complemented each other – Alex writing, her brother doing the design work and her father selling ads.

4.  With more time to prepare, they could possibly have hired someone to replace her dad.

Alex describes the experience as being “rough at the time”. That’s probably an understatement.

Losing a parent is hard. Watching one wilt under cancer has to be worse.

Moving into and learning a business is difficult in the best of times. Deciding to sell is probably one of the hardest things that anyone does in their life.

Dealing with two major life events at once cannot be easy.

And it’s all so avoidable. It’s called succession planning.

If you want to read the story in Alex’s words go here.

 

 

If you enjoyed this post you’ll also enjoy 4 Reasons Why Every Business Should Be Sold…..Eventually

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Tags: business owners, execution, family business, Jim Stewart, Planning, preparation, ProfitPATH, purchasing, selling, strategy, succession planning, valuation

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