Lack of interest from heirs and the need for high investments may indicate that selling is the most prudent option for the family.
Many business owners are concerned about the future of their family businesses. Therefore, they are very interested in topics such as succession planning, professional management, boards of directors, independent directors, committees, audits, protocols, and family and shareholder agreements.
These tools are important to ensure the continuity of the company after the departure or absence of the founder and aim to preserve the value of the business across generations.
However, is selling really the best option?
That's because, even with all the science on succession and governance, keeping the company in the family may not be viable in many cases.
This can happen for several reasons, such as the high cost of implementing these solutions or simply because the successors have no interest in continuing to lead the business, not even indirectly. In these cases, the most natural alternative may be a sale.
If the heirs do not wish to take over or become involved in professional management, perhaps it is time to consider transforming the company's value into financial resources, which can be done through an M&A (Mergers and Acquisitions) transaction.
In this way, the business can continue to thrive in the hands of new owners, while the heirs are free to pursue other professional and personal paths.
Decisive factors
When deciding whether to continue with the company or sell it, two questions are fundamental.
The first is to understand that every business goes through life cycles. At certain times, it may be very competitive, but over time it may require more scale, technology, capital, or even a new management model to remain in the market.
If the family wants to continue, it needs to be prepared — with qualified professionals, financial resources, and the flexibility to adapt. Otherwise, the company may end up losing ground and eventually disappearing.
The second issue relates to the family's interests. It's natural that, over time, successors develop other life plans and often choose careers that don't involve the family business.
The problem, in reality, lies not in these transformations, nor in the company's cycle, nor in the wishes of the heirs. The greatest risk is that the entrepreneur will not perceive these changes and, therefore, will not act in time.
This can cause a valuable business to lose value over time. When faced with this situation, selling the company is a way to realize its value, ensuring that the heirs can use it for other life projects.
Succession assessment and investment needs
It is important for the business owner to honestly assess not only whether the successors are interested, but also whether they are truly prepared to take over the business. In many cases, the best solution for a new phase is to hire external, more qualified professionals.
Furthermore, it's necessary to consider whether the family has the resources to invest additional funds should the business need to reinvent itself or grow. Due to the rapid evolution of the market, especially in certain sectors, this analysis should be done frequently.
Therefore, if there is no interest on the part of the heirs and the family is unwilling or unable to make the necessary investments, selling becomes the most prudent alternative.
The best time to sell and the importance of consulting services.
After deciding to sell, it's necessary to prepare for that moment. The ideal timing isn't necessarily when the business owner decides they want to sell, but rather when the market is favorable and there are buyers willing to pay a good price.
Many business owners only think about selling when they are already tired or close to retirement. However, ideally, they should consider selling when the company is at its peak value.
In this process, having specialized advice is essential. The divestment process involves several technical aspects and can be quite complex. For the business owner, it is a unique experience, often lived only once.
Experts, on the other hand, engage in this type of negotiation every day. Therefore, without guidance, the business owner may begin the negotiation at a disadvantage.
Knowing the right time to make a sale decision is crucial. By acting during a period of strength and prosperity for the business, the value built up over the years will be maximized, whether to maintain the legacy or to open new paths for the family.
Antonio Mazzucco is a specialist in corporate business law and a partner at Mazzucco&Mello Law Firm.