To Sell or Not to Sell



The Business of Family
To Sell or Not to Sell
By Mike Boyd • Issue #25 • View online
Your family business is your best vehicle for generating income, preserving wealth and serving the needs of your stakeholders. Yet, sustaining family enterprises for the next generation is a continuous challenge, with the majority not surviving.
It should not come as a surprise — yet it does for many family businesses — to learn that the most significant challenge standing in the way of enterprise longevity is family dissonance. Unhealthy family relationships are potential roadblocks to success that can perpetuate across multiple generations.
To Sell or Not to Sell
In planning the future of your family business, you are presented with two attractive yet incompatible alternatives: either maximise the company’s value and sell it or retain ownership and grow the business to benefit future generations.
In reality, however, selling your company, even at maximised value, is typically a poor financial option. First, taxes will reduce the sales proceeds, often by about one-third. Second, the future returns from reinvesting the remaining proceeds of the sale in fixed income and equity securities will be paltry in comparison to the profits generated from the successful operation of your family company.
The bottom line is unless you receive an opportunity too good to turn down, you must take steps now to ensure that your family business will survive and thrive.
Roadmap to Success
In studying why most family businesses fail, I have identified two principal causes: poor business practices, and problematic family/ownership issues.
Poor business practices include acceptance of excessive risk, outdated strategies, poor management, lack of good business discipline and absent or inadequate succession planning.
Family/ownership reasons include unaligned shareholder objectives, problematic family dynamics, poor governance, unfair reward systems, and inadequate family liquidity. When the combination of problematic family dynamics and ineffective governance leads to poor business decisions, family business sustainability becomes fatally endangered.
To achieve multigenerational longevity in business, family leadership should consider adopting these Ten Critical Initiatives.
Read the full article by George A Isaac over at Tharawat Magazine.
I’ve just wrapped up recording a future podcast episode with George and look forward to sharing with you his valuable perspectives on family wealth preservation.
George’s book: Your Business, Your Family, Your Legacy is worth your time.

This Week's Podcast Episode:
If you would like to leave a review for the podcast, this link will prompt you to open iTunes directly where you can leave a comment. Thank you!
Interesting links:
Bernard Arnault, Chairman and CEO of LVMH | The Brave Ones
Bernard Arnault, Chairman and CEO of LVMH | The Brave Ones
Does your family business need a war room?
Learn to Solicit Feedback … from Your Kids
Stay in touch
Mike Boyd is the co-owner and CEO of the Vroom Group, Founder of Prosura insurance, Investor at Mudbrick Capital, Host of The Business of Family Podcast and an active member of YPO.
Did you enjoy this issue?
Mike Boyd

I'm inspired by multi-generational businesses and the families who steward them.

Join me as I learn how some of the world's most interesting families share values, knowledge, resources, and wealth with the next generation.

In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue