To Sell or Not Sell: That is the Question
By Bernard Kliska, Ph.D.
Hamlet, Shakespeare’s melancholy Dane, vacillated so long trying to make up his mind about whether to move forward with his plans that his indecision finally threw the entire kingdom into turmoil and brought about his own death. In my consulting practice, I often see family business owners struggling with their own and other family members’ emotional ambivalence over taking the difficult step of selling the business. Although I haven’t yet seen this emotional ambivalence lead to death, I’ve seen it result in turmoil, protracted agony, significant loss, and a tortured legacy that ends up negatively impacting many family members and employees. This ambivalence is so common and powerful that the head of Cornerstone Business Services says that he routinely brings in a business psychologist to talk with potential sellers. He’s seen too many deals fall apart even after protracted negotiations because of ambivalence about letting go.
In the September 2007 issue of the Family Business Advisor, Jennifer Pendergast laid out excellent practical considerations around selling a business. But ambivalence within the family about letting go can render the practical considerations irrelevant. The 2003 Mass Mutual American Family Business Survey found that 88 percent of business-owning families would like their family business to continue controlling their firms. This, and my own experience with clients, suggests that ambivalence about selling is the rule rather than the exception.
Owners who have spent considerable time and energy building their businesses are usually not emotionally prepared to sell. They and family members—even members not directly involved in the operation—have invested considerable identity in it. I’ve often heard an owner describe their businesses as their “baby”. Understandably, when the time comes to give it up, an owner wants to leave the baby in the right hands—the hands of someone who, among other things, will pay the right price, take care of employees, grow the business, and honor the seller’s legacy and connection. Of course, this ideal buyer probably doesn’t exist, and holding out for such a buyer can become an excuse for inaction.
Selling a business is like facing the empty nest, but more difficult. As parents, we know years ahead of time that our child will someday leave, and we spend much of our time preparing for it. Most family-business owners, however, assume that the business will always be, if not in their hands, at least connected to them in some meaningful way. For this reason, anticipating the process of selling long in advance helps prepare for when the time finally arrives. But powerful emotional forces prevent most families from doing this.
The importance of alignment. Like the empty nest, selling the business can feel like a personal crisis, a tremendous opportunity, or both. If selling the business is the best option to pursue, all family members should align behind this as an opportunity. If they fail to align, the ambivalence, never directly addressed, plays out in acrimonious and never-ending disagreements about the details of the potential sale. When this happens, the sale will be either completely undermined or if it does go through, it will very likely result in post-transaction bitterness and resentment and a haunting sense of loss.
Just as clear, consistent communication between family members is essential for operating the business, it is also essential in the final stages of the business. The same factors that can impede communications during any part of the business’s life cycle can interfere toward the end. Family business leaders, used to being decisive and action oriented, are often better at making decisions than at promoting discussion and communicating the right things to the right people. Differences in alignment can also occur between various individuals or group within the family, between generations, between active and inactive family members, or between different branches of the family. Each of these groups and members within groups will have different perspectives on the value of selling the business. Communicating to all in the same manner may not address their concerns about a sale.
In the powerful and shifting realm of emotions, maintaining firm alignment requires an ongoing process. Once the sale process has been launched and the search for a buyer and subsequent negations unfolds, families should hold regular family update meetings. This not only reassures family members and helps craft an ongoing consensus, but sends a clear message to the family, employees and potential buyers that an orderly process is unfolding that will ensure that everyone’s best interests are being addressed .
Dealing with grief and loss. If grief and loss were not inevitable parts of our existence, we probably wouldn’t spend so much time and energy trying to avoid them. Recognizing what the sale of the business means in terms of loss to each family member is the first step toward managing these feelings. Some family members may fear that without the glue of the business, people will drift further apart. Others, for whom the family business provides an important part of their identity or meaning in life, may feel like they’re losing part of themselves. Others may fear for their economic future or, even more powerfully, for their children’s economic future.
I help people manage these fears by reminding them that while the sale represents the end of something, it also marks the beginning of something else. I often advise people to retire to something, not from something, to develop a vision for the future. It helps to remember that loss usually paves the way for something new, such as a new asset, which may require a different kind of energy, interest and attention. Family members who fear the loss of cohesiveness may wish to form new collaborative relationships with each other—working to benefit their communities, establishing a shared philanthropic venture, jointly managing a portion of the assets from the sale, or continuing to hold regular family retreats. Re-visioning the future can be useful (or even necessary) project for one person or for the entire family.
Farewell rituals can also help family members say good-bye and free them to move forward. Whether it’s a raucous wake, a farewell cruise, a solemn retreat or a privately published commemorative book, placing the power of fear, loss and grief into the container of a ritual or project honors the importance of the past and the present and helps prepare for the future.
When emotions and logic work together, they create an energy and synergy that make for successful family business. But when they clash, they are like the collision of high and low pressure systems that create tornadoes and hurricanes. When the timing or circumstances for selling the business seem right, or even imperative, but the fear and loss of grief prevent the family from following through, the result can be catastrophic. Ironically, years later, the end result is the same whether the transition goes smoothly or disastrously: The landscape will have changed and something new will have grown. Change, loss and renewal are inevitable. The crucial difference is how families go through it. Recognizing, addressing and honoring the powerful feelings that the sale of a family business evokes will help ease the most difficult, yet natural, of transitions.
Bernard Kliska, Ph.D. is an associate with the Family Business Consulting Group, Inc.® based in Chicago, IL.