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LEGAL VIEW
IN ASSOCIATION WITH:
EASING FAMILY CONCERNS
Lancashire family businesses continue to prove attractive to buyers. The last 12 months has seen a number of high-profile family concerns change hands.
Businesses in sectors ranging from food production to textiles and engineering have seen families make their exit, sometimes after many decades of hands-on involvement.
Deal watchers say there is a continuing appetite for well-run, profitable family businesses, with buyers attracted to their culture and values.
However, family business sales present their own unique challenges, including managing the different expectations that may exist across the generations.
Ryan Bilsborough, corporate finance manager at Blackburn headquartered accountancy firm PM+M, explains: “Sales where there are multi- generational shareholders are often among the most complex types of deal that we work on as expectations can differ widely.
“There can be different perspectives on a transaction, older family members might take a holistic view of the deal, focusing on the wider issues such as legacy and sustainability of the business; while younger people may be more inclined to place greater emphasis on price.
“It is essential for everyone to be unified before
putting the business up for sale, or approaching potential buyers.”
Ryan says the key to success lies in advisors understanding the various interactions in the family in order to “collectively establish a unified position” when dealing with potential acquirers.
And he warns: “The advisors need to be seen to be working for all sides of the family shareholders to optimise a cohesive strategy. Without such a strategy, a sale can easily be put in jeopardy or collapse all together.”
Steve Bell, corporate finance director at business advisory and accountancy group Pierce, also highlights the generation challenge.
He says that the decision to sell may have come through a decreasing commitment to the business through the generations.
Steve says: “Many first and second generation entrepreneurs are committed to the business but as it is passed down to the third and subsequent generations the desire and commitment to the business can wane.”
He says business owners looking to sell have a number of options, and he adds: “Many are likely to want some form of security for the staff who have worked alongside the vendors for a number of years. This can be difficult to achieve on a sale to a competitor.”
For that reason a sale to a management buyout team or an employee ownership trust may be right path.
Steve says that buyers are being “extra cautious” when it comes to due diligence and he reveals: “Deals are taking longer as buyers and their funding partners want to ensure all Ts are crossed and Is are dotted.
“Regular and accurate management information highlights that the vendors are aware of what is happening in the business. Preparing for an extensive due diligence process is essential.
“Our view is that there is still significant activity and appetite for well run, profitable companies
Ryan Bilsborough
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