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Business Transition Strategies Part 1: Family Members

By April 3, 2019December 23rd, 2021No Comments

At Vision Point Capital, we strive to provide more than just a valuation or getting a deal to the finish line. We are committed to be the premiere exit planning firm for business owners. This means being much more proactive on the front-end with proper planning. As such, this newsletter’s mission is to provide timely, relevant content for business owner’s and their advisors as they approach the myriad of challenges, alternatives, and family dynamics associated with the transition of a business. Please find below the first article in a multi-part series of business transition strategies.

Transition Strategy #1 – Sale to Family Members

We have all heard of this is a “Family Business”… Indeed, passing down a business to the next generation is becoming more and more rare these days.  However, for those committed to seeing transitioning the business to the next generation, keeping the “legacy” in tact can be quite rewarding while also is filled with numerous landmines.  Any business transition alternative has its pros/cons and should only be considered with counsel from an experienced team of advisors.  While family can take on various meanings, for purposes of this article, we will focus on the transition to children.  While by no means is the list below comprehensive, it does convey some of the hurdles families face when transitioning to the next generation:


Business Continuity – No major immediate disruptions in the business. Vendors, suppliers, customers, and other stakeholders remain primarily unaffected.

Legacy Preservation – Since the same family owns the Company, this helps secure the legacy in the community for years to come.

Keeps Family Perks – Vehicles, Amex purchases, Meals & Entertainment, etc… could possibly stay uninterrupted.

Employee Buy-In – If the children have been involved or visible to the employees over the years, it helps with ease of the concern that comes with any change in ownership.


Shirtsleeves to Shirtsleeves in Three Generations – Do the children know first-hand the sacrifice of the parents or grandparents in starting the business?  Did they see the struggles and sacrifices made in the early years of the business?  Or have they only known a life of plenty and often lack the understanding of the hard work that went into building the current lifestyle. Much more can and has been written about this and we will explore further in later correspondence.

Motivated Candidate – Do the children even want to run the business?  As can be seen in various articles and studies of recent generations, more and more individuals are not motivated by ownership and the added pressure of running the business. They have witnessed first-hand the stress and demands that ownership requires, and they want no part of it.  They are more comfortable in being an employee and focus on balancing life “outside” of their job.

Qualified Candidate – Is Johnny or Suzie qualified?  What has their work experience been up to this point. Have they started from the “ground” floor and learned all the facets of the Company?  Are they respected by the Employees?

Financial Consideration – Most likely will not “maximize” liquidity since expectation will probably be a “sweetheart” deal.  Most of the time the business owner will even seller-finance most of this transaction and the future consideration could be at risk if the business is not managed properly once they give up control.

Defining Fair – Finally, one of the most strenuous situations we have seen in our experience is when there are multiple children in a family and say only one is in the business with the other two outside the business.  Most parents want to be “fair” but that can be quite tricky in these situations.  Every family dynamic is unique and the most important thing we have seen for families who handle this correctly is “Communication is Key” and the earlier these discussions take place the better.

Summary – In conclusion, the transition of any business ownership can be quite daunting due to the number of stakeholders (family, employees, owners, vendors, community, etc…) involved.  However, if done properly, it can help secure the legacy that has taken years to cultivate. As we take a look at the landscape of America, businesses that are successful for multiple generations have become the exception to the rule.  However, it is still possible with the right advisory team, to implement the necessary transition plan to navigate the challenges ahead.  Please do not hesitate to contact us to help with any business transition needs.


Upcoming Articles:

Gifting to Family Members

Transfers to Management Team / Key Employees

Transfers to Employees (ESOPs)


About VPC:

Vision Point Capital focuses its services in three pillars of consulting for business owners: 1) Valuations; 2) M&A Advisory, & 3) ESOP Advisory.  Working with business owners and their advisors is in our DNA.  Please check out our website at for more information about our services and team members.