At least half of the companies in the U.S. are family businesses, according to Harvard Business School.  These businesses are the “backbone of the American economy.”

What happens when the founders decide to retire and hand over the reins to a new generation? For many family businesses, that involves one of the most complex processes and generates the most challenges.

Madison had been a sole proprietor of a small widget business for several years when she started succession planning.  Her daughter expressed interest in working with Madison and jumped in to learn the business.  After a couple of years, Sherri was very familiar with the products and the manufacturing process.  Sherri is now pushing for Madison to retire and leaving the business to her. 

Madison has been confident in turning the business over to Sherri but still wrestles with several stressing issues. There are other children and how does she address equity, as most mothers would. The other children have no interest in the business, but Madison is adamant about addressing equity through other assets.

 After much discussion, it has been agreed that the transition would be through a sale of the business to Sherri. Further research needs to be completed and an attorney engaged to complete. When you “sell” to only one bidder, that is the total range of your market – a party of one. Agreeing on a price and terms can get emotional and drawn out.

How Procore Advisors can help

• Referral to attorney, CPA, other professionals 
• Valuation study
• Corporate governance structure
• Buy-sell vs. gift analysis
• Review key documents, including will and trust, other estate documents