On the local sphere here in Malta we have evidenced this on a number of occasions through the sale of older serving family businesses and sale of thereof.
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.
- 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.
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.
Understandably, the sale of the business may be considered a threat to family cohesion and sense of purpose. As a result, some families rush to fill the perceived vacuum that a sale has created, but in doing so might not pay sufficient attention to their long-term purpose and strategy, while focusing on short-term tactics related to investments and tax planning.
Thankfully, selling the business brings with it opportunities to renew, revise and reinvigorate a family’s sense of purpose.
It’s important for family members to patiently consider their new and emerging purpose as a family, and their objectives for the continuity structures they are developing.
A new set of goals and new shared purpose may be the beginning of a new legacy for the family. A family operating company is owned collectively by a family. In contrast, wealth stemming from a sale will be divided, and owned or controlled directly or in trust by individuals rather than by a family collective.
Wealth creators need to understand and accept that they have relinquished control of assets which have been transferred directly or in trust to beneficiaries. Beneficiaries are well advised to understand the newfound rights and responsibilities that accompany their ownership of assets that have resulted from the transaction.
redefining ownership after a sale means: Recognizing the additional freedoms and losses of control that accrue to individuals; the possibility that decisions will be more diverse and depart from traditional patterns; and imparting the right kind of education and development for people who are less constrained by the cohesive power of a family collective.
(All factual and statistical information presented in this blog has been obtained from an extract of an article from the fbcg.com ) Follow us on our Facebook page and Family Business Office website at www.familybusiness.org.mt
At the Family Business Office we can offer you assistance in dealing with family business succession planning issues through incentives supporting advisory and mediation services. Contact us today on email@example.com.