Many companies die because of differences in management between family members: sometimes, the founding brothers are no longer around and their sons (now cousins) disagree about the management of the company.
In other cases it is the owner who foresees future conflicts between his sons and chooses to sell the company in order to preserve family peace and be able to help each of them have an independent business career.
Other times it is the son or wife of a company owner who is in conflict with other partners and the owner, now older, foresees problems when he is no longer around.
Such situations should always be addressed as soon as possible. Lack of interest in continuing the business on the part of the children or a lack of preparation is another reason to sell a company.
The owner must understand and accept that his children want to pursue different paths from him.
One time the lawyer of a business owner called us because this owner needed some help. He was very sick, he was loyally attached to his employees and he feared leaving the company to his daughters. He thought that they might ruin the company or not look after his employees. The daughters stood guard at the hospital and it was impossible to even have a private conversation with the owner. He died without ever even attempting to sell. It was a sale that, if planned in time, would have been successful.
Very often, owners tell us that they can’t imagine their children prepared to take on the responsibility of the business and they would prefer them to look for a better suited job rather than to continue the family business.
We were asked to help a young man who had inherited his father’s company. He knew nothing about the company and everything about it was foreign to him. It was difficult for him to relate with the employees who saw him as a child and he felt out of control. He couldn’t stop putting his inheritance money into the company, but there was a constant need for more investment as, immediately, the company would run out of cash. His inexperience was negatively affecting the management of the company.
We sold the company to an industrial group, the young man saved his inheritance and he freed himself from a situation that would have led him to ruin.
Considering the sale of a company is particularly important when the company is a problem for the family or when the family is a problem for the company.
Written by Enrique Quemada, President of ONEtoONE Corporate Finance.
