‘Selling a business built over generations can trigger concerns about identity and legacy’
For founders, selling a family business can feel like losing part of their identity. Picture: iStock
Sometimes, families simply reach the end of the road with their long-established business. Family members may have no interest in taking an active part in the company and want to sell it. Or it may be the case that the business needs an injection of fresh capital from outside investors to realise its growth potential. Whatever the next step, there are almost always significant emotional and financial issues to consider.
Laura Gilbride, deals partner in corporate finance at PwC Ireland, says family businesses have a wide range of exit options, and the right choice depends on the family’s goals, timeline and appetite for ongoing involvement. “A full sale to a strategic buyer or private-equity investor can deliver a clean exit and maximise value, while others prefer a partial sale, allowing the family to derisk while retaining a meaningful stake and continuing to guide the business,” she explains.
Some choose a management buyout or a structured succession plan to transition ownership internally. “The important point is that families have more flexibility than they often realise, and with the right advice, they can shape an exit that protects both value and legacy,” says Gilbride.
Brian Barrett, managing director at Focus Capital Partners, says family businesses must strike a balance between preserving the legacy and heritage of the past, and the leadership required to guide and grow the business into the future.
“Yet a common challenge in family business transactions is the limited delegation of roles and responsibilities beyond family members,” he notes. “In advance of a transaction, where a family business has not invested in attracting and retaining a strong external management team, with robust corporate governance structures in place, exit options available to the family can be limited.”
Exit readiness planning is essential for a family business aiming to sell in a three-to-five-year horizon. “Early preparation allows the business to focus on the key value drivers which buyers assess, including sustainable growth, profitability and operational strength,” says Barrett.
“This typically involves investing in new markets, products, capital equipment, technology and systems, as well as strengthening governance and financial reporting.” Proactively addressing these areas well before a sale can enhance the business’s appeal and maximise value, Barrett adds. “It also gives the family time to input and align on objectives, as well as manage the process effectively.”
The problem is that family businesses typically must navigate several complex matters which can impact “pure business decisions”, says Fiona Haughey, financial planning director at Davy.
“There is an imperative to provide financial security for stakeholders but also ensure fairness to adequately compensate the family members who have contributed to the success of the business more than others,” she explains. Shareholders will naturally want to protect their financial interests but conflicting personal financial needs can potentially lead to disagreements on the right approach for sale.
Haughey says she often finds that family business owners are so immersed in the day-to-day running of their business that they don’t stop and think about retirement and what that might mean for them. “It can be an anxious time selling a huge asset and a huge part of your life and identity. As an adviser, we ensure that the transition to retirement is teased out as part of a broader financial planning discussion.”
Gilbride agrees that the emotional dimension can often be more complex. “Selling a business built over generations can trigger concerns about identity, legacy and the future of long-standing employees,” she says.
“These emotions are entirely natural but, if not acknowledged, they can slow decision making or create misalignment within the family. Experienced advisers help families navigate both the practical and emotional aspects, ensuring the process stays on track and value is preserved.”
Bruce Stanley, tax consulting partner with HLB Ireland, says emotional issues can augment practical challenges in these situations – with real commercial consequences.
“For founders, selling the business can feel like losing part of their identity,” he says. “The business may have supported multiple generations and carries the family name, reputation and legacy – this emotional attachment can make it difficult to let go of control, accept external scrutiny during due diligence, or agree to changes proposed by a buyer.” Sales also have a habit of bringing family tensions to the surface, Stanley warns. “Disagreements can arise between active and non-active family members, or between generations, over timing, price and what happens after the sale.”
Another common issue is key-person dependency. “In many cases, the founder or a small number of family members hold critical customer relationships or operational knowledge,” Stanley says, noting that, from a buyer’s perspective, this creates risk. “It often leads to earn-outs, deferred consideration or requests for the seller to remain involved post-sale, which may not align with the family’s original expectations.”
According to Stanley, the various exit options reflect a different balance between value, control, continuity and emotion. “A management buyout prioritises continuity, a third-party sale prioritises value, and a wind-down prioritises simplicity.” He advises that, while it rarely maximises financial return, liquidation can provide certainty and closure, particularly for smaller or lifestyle family businesses.
“In some cases, it is the least stressful option and avoids prolonged negotiations or emotional strain.” The core message is simple, Stanley says. “The families that plan early, communicate openly and prepare professionally tend to achieve the best outcomes.”
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