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Three tips for successfully selling your business to a family member

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Building a business takes time and perseverance. Often, selling a business to a family member means passing on your legacy to someone who you know will keep it going, growing and benefit from what you have created.

The selling process, however, is not made easier by you selling to a family member, and the relationship between you and them can become strained.

You will need to have a clear plan in place before you sell and follow the steps you have set out to make sure that the sale and your relationship remains intact. 

Here are three tips that you should include in this plan:

Provide comprehensive training

If you have been working alone for years, it can be difficult to have someone working alongside you, but this is something that you will need to plan for.

In order to make sure that your family member succeeds once they have taken over your business, you will need to give them the right kind of training. The more they know about how you run the business, the better equipped they will be to take over.

Before you begin the sale of your business, remind yourself that the sale will be a process, not an event, and working alongside them is a part of that process.

Keep things as professional as possible

Despite the fact that you’re selling to a family member, things should be kept as professional as possible in order to avoid problems down the line. One way to do this is to value the business as you would any sale. 

Also get everything in writing. It can be tempting to let decisions be made through conversations because you know the buyer but putting it all in writing will ensure that both parties are on the same page. 

This will ensure that any disagreements further down the line can be settled with proof of previous conversations.

Don’t forgo a contract either because you are selling to family. Treat the sale with the same kind of professionalism as if you were selling to a stranger. Getting the help and advice of professionals can also help to keep things professional.

Define the roles

Having clearly defined roles will help you let go. Make sure that both parties are clear on each of your roles during and after the sale. 

Are you going to have a clean break from the business? Will you remain on in an advisory role?

During the handover process, there should also be clearly defined roles so that this time is used constructively for a smooth sale. Give the buyer a well-defined role that also has some responsibility. You can then increase their responsibility while reducing yours.

Handing over parts of the business bit by bit according to a carefully structured plan will aid a smooth transition. Set a timeframe also, so that both parties are clear about what will be happening and when.

It is important that both you and the family member know what your role is going to be after you have handed over the business. 

Selling a business is never quick and easy whether to a family member or not, but either way with a plan in place it can be made far less stressful.

By Anthea Taylor, Assistant Editor at Dynamis and writes for all titles in the Dynamis stable including, and as well as other industry publications.