You may be the first generation, having built the business from scratch with blood, sweat and tears, and are now nearing retirement age and considering what to do next. 

Or, you may have been passed ‘the baton’ to drive the family business forward, and having successfully navigated the world of business ownership and getting closer to retirement age, you are now assessing ‘who next?’ 

What do you do?   

If you are the main decision maker in your family business, with several family members involved – do you sell, or are you obliged to pass it to the next generation? 

This is often a common dilemma in most (if not all) family businesses. 

As each family and business is different, the answer is not always a simple one, however answering the following questions will help you to decide: 

Do the next generation want to drive forward the family business?

• Although a hard question to ask (and answer), sometimes the next generation do not want to take on the reigns even if your main goal was to do so.  

• Business ownership is hard with many obstacles and responsibilities.  If the commitment from the next generation is not there, forcing this onto them may not be in the best interests of them, the business, and consequentially future family wealth. 

Are the next generation capable? 

• Depending on the transaction, if succession is planned effectively, then there will be a suitable transitional period to help develop family members into roles and potentially strengthen this with non-family members.  

• However, sometimes the answer is the hardest one to accept – the next generation may not have the required skill set or commitment to take the business forward. 

Are there increased risks/threats for the future business that will need to be managed?

• If the business operates in a declining sector, or with significant disruption by new competitors / technology then the family should consider the best plan for the overall success and wealth of the current and future generation. 

• If the next generation are capable and the business is well positioned to benefit from disruption to accelerate growth, then continuing family ownership may be the best approach. 

• However, if the next generation’s commitment is low, and alongside this, the business requires ongoing investment to fight off external threats, then selling to a third party may be the best approach.  

Ultimate family goals 

• The family should consider many factors when deciding on the future direction of the family business.  Understanding the ultimate goals will impact on the best approach for the business now.   

• If the key aim is to preserve the legacy and family name, then retaining will likely be the best approach, however this requires the right levels of capability and commitment from the next generation to succeed. 

• If the key aim is to maximise family wealth, then fully understanding the above questions will help assess the future business ownership opportunities and risks and whether value is best generated through retention or exiting. 

If you are at a crossroads of ‘what to do next?’, looking to explore what a sale or family buy-out could look like in terms of valuation and returns, or just starting out on your journey of ownership and looking to set your long-term goals, we are here to help. 

CN Strategic Advisors are a family-owned independent advisory boutique, providing specialist advice to business owners on key business decisions and milestones such as; Strategy, Succession, Business sales, Acquisitions and Raising finance.