Family Businesses and the Business for Sale Marketplace
Rupert Murdoch's retirement from his media companies, and the announcement that his son will take over the reins, has brought into focus family businesses and their succession plans. Family-owned enterprises have long been a cornerstone of economic growth and stability. According to Family Enterprise USA, there are over 32 million family business in the United States. These family businesses not only bring a unique blend of tradition, values, and dedication to their operations, they account for 83.3 million jobs and contribute $7.7 trillion to the GDP. Family businesses play a significant role in the economy, yet they face unique challenges as they navigate planning in the current economic landscape. When it comes to planning for the future of a family business, developing an exit strategy and succession plan can never start too early.
Retiring from the Family Business
Whether it's a small, locally owned shop or a massive global corporation, family businesses come in all shapes and sizes. While their influence is expansive, they often face distinct challenges. One significant issue is the impending wave of retirements among baby boomer business owners. BizBuySell's Insight Report, which tracks the health of the U.S. small business economy, found that almost a third of respondents are from the baby boomer generation. As they prepare for retirement and relinquish leadership roles, owners of family businesses face important choices about the future of their businesses. According to the Insight Report, nearly half of all business owners (45%) responding to the survey cite retirement as the reason for exiting their businesses. Business owners need to determine whether to pass the business down to a family member or sell it on the open market. Retiring from a family-owned business includes not only financial planning for personal needs but also the future of the business.
Succession Planning
A well-executed succession plan is a key factor in the long-term success of family-owned businesses, as it helps in identifying and training future leaders to take over the ownership role. A smooth transition can maintain stability, while a tumultuous one can lead to uncertainty and instability. Successful succession planning requires open and honest communication between all parties involved, including the current leader and potential successors. Seeking professional guidance from a business broker or business advisor can be instrumental in navigating this complex process.
Selling Family Business
As many as 47% of family business owners hoping to retire in the next five years do not have a successor, according to SCORE, a small business resource partner of the U.S. Small Business Administration (SBA). For these small businesses, retiring as a business owner requires a thoughtful exit plan. Business owners of family-owned business who are not transferring ownership to family members have a variety of options for selling the business—from selling to key employees or a management team, retaining ownership and hiring a management team to operate it, or listing it for sale to a third party. An exit plan developed years in advance of retirement provides business owners with the time necessary to identify areas for pre-sale improvements and mentor key employees, ensuring a seamless transition.
Navigating Sales, Retirement, and Succession for Family-Owned Businesses
Family businesses play an important role in the business world and have a big impact on the economy. Whether business owners choose to pass down the business to family members, sell to key employees, competitors or partners, or place the business on the open market, there are a variety of ways to exit their businesses. For business owners of family-owned businesses looking to retire and exit their business, download BizBuySell’s Guide to Selling Your Business: 10th Anniversary Edition to understand all available options.