{"id":560831,"date":"2012-06-27T03:27:18","date_gmt":"2012-06-27T07:27:18","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbgreenbay\/family-owned-businesses-do-have-choices\/"},"modified":"2022-01-31T12:44:38","modified_gmt":"2022-01-31T17:44:38","slug":"family-owned-businesses-do-have-choices","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/family-owned-businesses-do-have-choices\/","title":{"rendered":"Family-Owned Businesses Do Have Choices"},"content":{"rendered":"<div>\n<p>Family-owned businesses do have some options when it comes time to sell.\u00a0 Selling the entire business may not be the best choice when there are no other family members involved.\u00a0 Here are some choices to be considered:<\/p>\n<p><strong><b>Internal Transactions<\/strong><\/b><\/p>\n<ul>\n<li><strong><b>Hire a CEO<\/strong><\/b> \u2013 This approach is a management exit strategy in which the owner retires, lives off the company\u2019s dividends and possibly sells the company many years later.<\/li>\n<li><strong><b>Transition ownership within the family<\/strong><\/b> \u2013 Keeping the business in the family is a noble endeavor, but the parent seldom liquefies his investment in the short-term, and the son or daughter may run the company into the ground.<\/li>\n<li><strong><b>Recapitalization<\/strong><\/b> \u2013 By recapitalizing the company by increasing the debt to as much as 70 percent of the capitalization, the owner(s) is\/are able to liquefy most of their investment now with the intent to pay down the debt and sell the company later on.<\/li>\n<li><strong><b>Employee Stock Ownership Plan (ESOP)<\/strong><\/b> \u2013 Many types of companies such as construction, engineering, and architectural are difficult to sell to a third party, because the employees are the major asset.\u00a0 ESOPs are a useful vehicle in this regard, but are usually sold in stages over a time period as long as ten years.<\/li>\n<\/ul>\n<p><strong><b>External Transactions<\/strong><\/b><\/p>\n<ul>\n<li><strong><b>Third party sale<\/strong><\/b> \u2013 The process could take six months to a year to complete.\u00a0 This method should produce a high valuation, sometimes all cash at closing and often the ability of the owner to walk away right after the closing.<\/li>\n<li><strong><b>Complete sale over time<\/strong> <\/b>\u2013 The owner can sell a minority interest now with the balance sold after maybe five years.\u00a0 Such an approach allows the owner to liquefy some of his investment now, continue to run the company, and hopefully receive a higher valuation for the company years later.<\/li>\n<li><strong><b>Management buy-outs (MBOs)<\/strong><\/b> \u2013 Selling to the owners\u2019 key employee(s) is an easy transaction and a way to reward them for years of hard work.\u00a0 Often the owner does not maximize the selling price, and usually the owner participates in the financing.<\/li>\n<li><strong><b>Initial public offering (IPO)<\/strong><\/b> \u2013 In today\u2019s marketplace, a company should have revenues of $100+ million to become a viable candidate.\u00a0 IPOs receive the highest valuation, but management must remain to run the company.<\/li>\n<\/ul>\n<p><em>Source: \u201cBuying &amp; Selling Companies,\u201d a presentation by Russ Robb, Editor, M&amp;A Today<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Family-owned businesses do have some options when it comes time to sell.\u00a0 Selling the entire business may not be the best choice when there are no other family members involved.\u00a0 Here are some choices to be considered: Internal Transactions Hire a CEO \u2013 This approach is a management exit strategy in which the owner retires, [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-560831","post","type-post","status-publish","format-standard","hentry","category-selling-a-business"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/560831","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/comments?post=560831"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/560831\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media?parent=560831"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/categories?post=560831"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/tags?post=560831"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}