• January 19, 2022

Selling the family business is a social, emotional and psychological event as well as an economic

Over the past 20+ years, I have advised many families who have transitioned from business owners to owners and managers of considerable wealth. In doing so, I have noted a few apparently repetitive dynamics that have emerged in these families. So, while this is by no means an exhaustive accounting, in an effort to help families anticipate and to manage these transitional dynamics, I describe below three distinct patterns which I have observed and suggest approaches to appreciating and managing these dynamics.

  1. Ambivalent Transitioning
    Although from a liquidity perspective the sale of a business may be viewed as a welcome and positive event, a transaction is often accompanied by ambivalence and mixed feelings:

There may be a sense of loss because the business has been central to the family’s definition of itself for many years.
While some family members may be well prepared for a transaction because they anticipated it for a while, to others it might come as a surprise.
Family members who are expected to be delighted with the new wealth might feel overwhelmed by the range of options in philanthropy, travel, education, etc. that new wealth brings (“You can do anything you want.” “But I don’t know what I want!”).
Some people might view the transaction as a door, opening dreams to the future, while others might view it as shattering dreams of participating in the family’s legacy.
A few years ago, I surveyed a group of family members whose business was sold to a third party. The sale was a great success economically and a feather in the cap for the two brothers who managed the transaction. But family reactions were diverse:

“A great decision.”
“Kudos to my uncle.”
“It doesn’t seem real.”
“It’s been a conflicted disturbing time.”
“I feel bad that I am not happier.”
“The money doesn’t feel real, I’m not sure how to think about it.”
“Dad (one of the brothers who managed the transaction) is very depressed and overwhelmed by the administrative stuff.”
“I couldn’t be happier.” (Dad)
“I am not a decision maker anymore.”
“Nothing to do, no one to talk to.”
Ambivalence is a normal and healthy response to a significant event in the life of an individual and family. Acceptance of these mixed feelings is an important path to their resolution. People will cope in different ways, and opportunities to share these feelings openly with others, without judgment, will be key to a good path forward.

Grieving a Loss
You may have learned of the five stages of grief described in Elizabeth Kubler-Ross’ book On Death and Dying: Denial, Anger, Bargaining, Depression and Acceptance. You may understand as well that even a positive change in one’s life can lead to an experience of grief that precipitates a person’s journey through these five stages. When a business is sold it’s not unusual for family members, even those who are likely to benefit substantially, to pass through at least some of these stages: Denial that a sale is necessary or imminent; Anger about having to deal with a significant change in the life of the family; Bargaining around how to prevent, minimize or reconfigure the transaction; Depression as reality actually sets in; and finally, Acceptance of the change and a view to the future.

A person’s successful progression through these stages is enhanced by recognizing the various feelings as they occur, talking about them with others and developing action steps to cope with change.

By discussing the reasons for a sale and moving on to the benefits of the new situation, along with plans for the future, a family can help individual members cope with the change that a sale brings. It’s perhaps most important (and often most difficult) to create an atmosphere around the transaction that is nonjudgmental of the ambivalence that family members express. When the opportunity for discussion occurs, the focus should be on listening and trusting that ambivalence in most cases will eventually transition to realistic appraisal of the benefits and advantages that a transaction brings.

  1. Discovering Purpose
    A shared business is often central to the lives of family members, and shared ownership brings with it many elements that contribute to family cohesion and to a sense of purpose, for example:

Experiencing pride of ownership
Community recognition
Regular family meetings
Connecting with a multi-generation family legacy
Opportunity for social interaction with family members
Family philanthropy
Collective participation in programs and conferences about family business

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