5. Owning Stock
Another issue Patrick covers is whether or not children should own stock. If there are several children involved, then he feels it is important that all children own stock. Otherwise, some children will feel invested in the business and others will not. This issue can become a significant problem once you, as the business owner, either retire or pass away.
6. Gift or Sale?
In his sixth point, Patrick recommends that a business should only be sold to children and not given outright. If a child is simply given a business, then that business may not have any perceived value. Additionally, if a child or children buy the business, then estate planning becomes more straightforward.
7. Stepping Back
In point seven, Patrick astutely recommends that once a parent has sold their business to their child, the parent must “let go.” At some point, you will have to retire. Regardless of the outcome, you’ll ultimately have to step back and let your children take charge.
8. So Long Status Quo
Finally, it is important to remember your children will change how things are done. This fact is unavoidable and should be embraced.
Working with an experienced merger and acquisition advisor is a great way to ensure that selling a business to your child or children is a successful venture. The experience an M&A advisor can bring to this kind of business transfer is invaluable.