Planning to Sell Your Business? - Know All the Stakeholders
In most privately held businesses, the stakeholders are easily identified - a business partner, spouse or family member with an ownership interest, a board of directors, a key employee. And, from a legal or a practical standpoint, their approval is required in order to proceed with the sale of a business. The timing and approach taken for involving the stakeholders may vary, but business owners need to consider the needs, opinions and possible objections of all stakeholders before wading into the process too far.
“You can’t sell this business! Our Dad started that company!”
Business owners must find a way to deal with the emotional aspects of selling a family business, especially if there is a family history behind it. A common situation is where the father builds a business, hands it over to his children, and then, after the father passes away, the children decide to sell the business. When they approach their mother for her approval, she angrily protests, “You can’t sell the business. Your father started that company!” In this particular case, the children didn’t go through with the sale for fear of disappointing their mother. In other cases, the families will engage in long, contentious battles over the decision to sell or not. A financial therapist is often brought in to help family members work through the emotional issues.
Before you can say “yes” to a deal, you need to consider who can say “no”
Sellers are often surprised by the number of consents and approvals necessary to close the sale of their business. In many cases, it goes well beyond the approval of key stakeholders and family members. It's not unusual for sales to be cancelled or postponed due to the objections of lenders, landlords, local authorities, or others with whom either party has a material agreement in place.