Family Businesses & Mergers and Acquisitions

Family businesses provide a bond between generations. A lot of times, they are the cornerstone of a family unit and are the reasoning behind why siblings, parents, and extended family members have strong relationships, live close to one another, and see each other often both in and out of the office.

The decision to sell or engage in the merger or acquisition of a family business can take an emotional toll on families who aren’t prepared. 

Selling can lead to a loss of family identity and takes away a legacy for future generations— something the family has been known and recognized for for years. A merger or acquisition could provide the opportunity for a family business to reach new levels of growth and obtain newfound capital they would otherwise not have. However, it also could mean internal changes that shake up the status quo.

Selling, merging, or being acquired is sometimes the best option to preserve the wealth and well-being that a family has built. Preparing for all scenarios is essential and is something not just family owners but all business owners must consider when building a successful business. 

External factors such as the economy, industry trends, and competition can significantly influence the growth and prosperity of a family business. Some may find that these factors provide them with the opportunity to grow considerably if these factors have solidified themselves as leaders in the marketplace. In contrast, others may find they are missing the proper capital to keep up with increased operating costs due to economic conditions.

There are many benefits to selling a family business. Built on unwavering values and a strong, established company culture, many family businesses share the characteristics of an energetic, entrepreneurial atmosphere and a customer-centric approach that is attractive to buyers or private equity investors. 

More often than not, there is a capital constraint placed on family businesses where they cannot reach their full potential due to limited resources. A private equity investor can provide family businesses with the cash flow needed to achieve new levels of growth while also enabling them the opportunity to stay on and manage the business— ensuring values, culture, and the reputation the organization is known and recognized for stays in place.

Communication and collaboration, short and long-term planning, and understanding the influence of external factors are all areas where family businesses must excel to make the proper decisions for their business and avoid any shocking changes that will take an emotional and financial toll on the legacy they’ve built. 

Having an M&A Advisor can alleviate stress for family businesses and ensure they’re prepared to take the proper steps when the time comes. At Aberdeen, we help business owners prioritize their goals in relation to their business, their families, and their futures. Contact the Aberdeen Team for a free consultation on how we can help.