Selling your business: the emotional price tag

On the surface, the process of selling a business is much of what you’d expect: valuations, numbers, negotiations and legal documentation. But, dig a little deeper, and it becomes apparent that the softer, non-financial matters can be just as critical to a transaction’s success.

Recently, I sat down with a father and son partnership who had been working together in their successful family business. Both had worked tirelessly to build the business over the past decade, but they had reached a critical point where professional and personal needs were pulling them in different directions. The rift was creating conflict and causing them to consider a sale.

As they entered the process, it was clear that the numbers weren’t the part that challenged them. Instead, it was the unexpected emotions that surfaced.

The sale of a privately-held company is starkly different than the sale of a publicly-held one. With a public firm, a board of directors typically makes the decisions – based solely on financial and business issues. With a privately-held company – especially one that has multiple family members involved – the logics of decision-making can become clouded by the emotions that accompany change and letting go of something business owners have worked so hard to create.

Over the course of my career as a middle market M&A advisor, I’ve learned that one of the most difficult aspects of selling a business is caring for the emotional well-being of the business owner. You might be surprised to learn that preparedness – just like with anything else – can help mitigate concerns. Here are some of the considerations you’ll need to think through:

  • What will the family legacy be?  Using the example above, are both father and son looking to exit the business at the time of sale? Or, is the father is considering retirement, putting the onus on the son to stay on to assist with the transition? This can create enormous pressure on the son who will stay and transition the business, working under a new ownership to facilitate an exit and to maximize value for the father and extended family members. Or, are all family members looking to exit the business upon sale and is there a suitable management team in place to allow that to happen?
  • Who will you sell to?  Once the length of time the son is willing to stay to transition the business has been determined, another – more complex decision arises. Who is the right buyer for the business? Is it acceptable to sell to a competitor, and will family members work for that competitor for a prescribed period of time?  Or maybe a partial sale of the family business is an option and the son may have interest in working with a financial buyer. Private equity and financial sponsors are abundant and diverse in their approach to partnering with private enterprise.
  • Proceeds. Has the family considered how they will manage sale proceeds? This requires both effective tax planning and consideration of how wealth will spread amongst generations.  Will there be any charitable contributions at close and is a family foundation an option?
  • What’s next?  In my experience, surprisingly few clients have sold their businesses and sailed off into the sunset. Rather, after decades of intense focus on building a company, it is often unsettling to be unencumbered and open to new possibilities.  This is a new period of exploration – full of opportunity to self reflect. What are you curious about? What are you grateful for?

Due diligence and business fundamentals will always be at the forefront of the sale process. But business owners should not underestimate the emotional toll a sale can take. If you’re considering selling your business, you’ll need to dig deep and think about what’s most important – whether it’s legacy or shaping the future of the business.  Self-reflection and careful planning will ensure you’re better poised to handle the inevitable ups and downs.


 Kellie Manchester is a founding Partner of Sequeira Partners in Vancouver, BC., where she advises clients on a broad range of transactions, with deep experience in advising intergenerational family businesses.  She has a Bachelor of Management degree with Honours and she holds the CFA designation.