Working with family can be a great way to build a small business because you know you can count on them to have your best interests at heart.
Unfortunately, when it’s time to sell, a company staffed with a number of family members raises several red flags for potential buyers. And this is especially true when family members hold key management positions.
Buyers’ top concerns include:
Will these family members be resistant to change once I take over?
Are they the most qualified people for the positions they hold?
Are they earning salaries far higher than a non-family member would expect for the same position?
Is the family member committed to the success of the company or could they leave and become my competition?
That’s why it’s best gradually phase out family members a couple of years before you sell and replace them with qualified staff who will make a good impression on a potential buyer.
Stay tuned for Tip #5.