When should you sell the family business?

Business Leader Post, April 15, 2014

Thomas D. Davidow, Ed.D.

There are many answers to this question, and, like all solutions to the family business, they vary according to the family and the circumstances.

For one thing, let us not forget or underestimate the strength of the emotional attachment that family members have to the family business. I have a picture in my house of the clothing store that my grandfather founded and that my father ran until he closed it in 1963. My father passed away in 1967. Unfortunately, none of my three daughters ever met him, had ever been inside the store or ever had any experience at all with the family business. Nevertheless, each of them saw the picture in my house and asked independently if they could have a copy of it. When I go to their homes to visit, I am comforted by seeing the picture of the clothing store that my grandfather founded.  My only conclusion is that something must have resonated powerfully enough with all of them when they saw the picture that they chose to hang it in their homes.

If that is the experience of my three daughters who never met their grandfather and never stepped inside the family business, imagine how much more intensely family members who have participated in their family business experience their attachment to it. For them, even contemplating selling the family business, let alone going through the process, is excruciating. If you have any doubts, talk to the M&A people who have tried to arrange for the sale of the family business.

Family businesses can provide for the family and be the binding force, helping the family keep its sense of togetherness and integrity. But family businesses can also be the vehicle that drives families apart. All too frequently, events occur that create conflict between and among family members that can destroy the sense of family. When family members continue to fight until one "winner" ends up with control or ownership of the ongoing business, that winner has  a Pyrrhic victory.  There are no real winners in that situation. The family is better off selling the business and trying to figure out how to lick its wounds and restore the family.  

At the end of the day, the only thing that really counts in life are  relationships.  You can have a healthy thriving business and lots of wealth and no meaningful relationships. Who cares?  As my mother used to say, a wealthy person is someone who is happy with what he or she has.