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Buying or selling your family business?

Whether you are thinking about selling the business you have spent decades building, or looking to grow through acquisition, the process will be more complex and time-consuming than you expect. Here is what I have learned from advising family businesses through deals that can define a lifetime of work.

Yvonne McCormack, Partner

Preparation is everything

Some people come to us and say they want to sell immediately. We can work with that but it’s far from ideal. You should prepare at least 24 months in advance of going to market. Start by reviewing a due diligence checklist. Three years of audited financials, key contracts, lease agreements, employment records, share registers - these are standard requirements. If turnover jumped or margins shifted there is always a reason and you have to be ready to explain it.

The emotional side matters

For family business owners the company is bound up in relationships and years of hard work. When you come to sell, there are emotional hurdles on top of the financial and legal complexity. Similarly, think carefully about what comes next. Many owners who sell are nowhere near retirement age and the sudden loss of a structure that has defined their daily life for years is something for which they are not prepared. Exploring options such as a consultancy role within the business post-sale can provide a valuable transition.

Know what your business is worth

A good advisor will work through a tailored valuation, considering not just historical financials but also the future potential of the business. If you are selling due to health reasons or other personal circumstances, and the business has untapped potential, that needs to be factored in.

Buy with your eyes wide open

When acquiring a business, the key question is how does the target align with your personal and business values? And are you prepared for what ownership involves - potentially 60, 70 or 80 hours a week? Financing also needs to be thought through. If using the traditional bank route the buyer generally needs to bring at least 30% of the purchase price themselves.

Due diligence on the buy side is at least as important as on the sell side. Transactions sometimes stall because of something beneath the surface - a lease problem or an unresolved employment issue. Go deep and hire professionals who know your sector.

The right team makes the difference

In my experience the quality of the professional team around you is the single biggest determinant of how smoothly a transaction proceeds. Choose financial, legal, and tax advisors who understand your sector. You are going to spend a lot of time together so make sure you like and trust them.

Seek out specialist tax advice early. Retirement relief, entrepreneur relief, and participation exemption are not details to leave to the end. Structuring your affairs correctly well in advance of a sale can make a material difference to your net outcome.