Challenges of succession in business transactions
Recently, in my role as buy-side advisor, I experienced first-hand how important intra-family alignment is when selling a family-owned business.
A successful entrepreneur had initiated the sale of his company. A potential buyer had been identified, a data room had been set up, due diligence had been completed, the purchase price had been agreed upon, and the contracts were prepared. Both parties had invested time and effort, guided by goodwill and the shared conviction that they were doing the right thing.
Shortly before the contracts were to be finalized, the entrepreneur revealed that his children were no longer in favor of the sale. They now wanted to continue running the business themselves.
Although the entrepreneur had involved his children in the process from the beginning, he had not clarified their positions in advance—neither their views on the future, nor their doubts. And so, he moved forward with the sale without having secured their clear support.
This example clearly demonstrates how important it is to reach a shared family decision before initiating a sales process. It’s not just that the entrepreneur invests time and money in the sale. The company also enters a period of uncertainty—one that should ideally be kept as short as possible. Both employees and customers are eager to gain clarity about the company’s future. On top of that, tensions within the family can intensify—tensions that could have been reduced by having an open discussion and reaching a firm internal consensus before deciding to sell.
That’s why full transparency within the family is essential when it comes to a decision as important as the sale of a family-owned business.
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