Common Challenges of Selling a Multi-Generational Family Business

Steve Simon
Feb 20
4 min read

TL;DR:

Getting family members aligned is often difficult as not everyone will agree on when or how to sell.
Family finances are often tangled with the business, making diligence with prospective buyers messy and slow.
Making the business buyer-ready might take more time than other businesses. For instance, key undertakings of the business might rely too much on family members and informal processes.
Maximizing the sale price might not be the only priority. Legacy, employees, and culture are often key aspects of a buyers bid.
Planning for after the sale can be uncomfortable, both in terms of financial (e.g., trusts) and personal (e.g., what comes next).

Selling a family business that’s been passed down for a generation or more is much different from selling any other company. It’s emotional, complicated, and carries legacy considerations that most buyers don’t fully appreciate.

If you're thinking about selling a family business, here's what to expect and how to prepare:

1. Family Alignment: The First (and Often Biggest) Hurdle

If you’re the sole owner, selling is relatively straightforward. But in most multi-generational businesses, ownership is spread across siblings, cousins, or extended family—each with different ideas on what should happen next.

Some want to sell, some don't. One group is ready to cash out, while another wants to hold onto the business indefinitely.
Valuation disagreements. Many families believe their business is worth far more than what the market will actually pay.
Next-generation succession. Is there someone in the family who wants to run the business? And more importantly, should they?

Sorting through these issues before going to market is crucial. Internal disputes that flare up mid-process can kill deals and damage relationships.

✅ How to handle it: Have honest conversations early. Bring in an outside advisor if needed to mediate discussions and provide a reality check on valuation.

2. Separating Business and Personal Finances

Many family businesses don’t have clean financial records, especially if they’ve been around for decades. It’s common to see:

Expenses. Personal expenses running through the company (cars, real estate, travel).
Reporting. A lack of formalized financial reporting.
Payroll. "Legacy: employees or family members on payroll who aren't actively involved in the business.

Buyers will want to see clear, detailed financials. If too many personal expenses are tied up in the business, it can make valuation tricky and slow down due diligence.

✅ How to handle it: Start cleaning up financials well in advance of a sale. Work with an accountant to separate personal and business expenses, and ensure tax filings and financial statements are up to date.

3. Making the Business Less Dependent on You (or Key Family Members)

One of the biggest red flags for buyers? When a business only works because of its current leadership. This happens a lot in family businesses where:

Decision-making. Sometimes decision processes are highly centralized around a small group of family members.
Operations. Operational processes are informal and not well-documented.
Relationships. Customers and suppliers have long-standing personal relationships with family members.

Buyers want to see that the company can continue operating smoothly without the current family leaders. If everything is built around you, it will hurt valuation and scare off buyers.

✅ How to handle it: Start delegating. Build out a leadership team that can function without you. Put formal processes in place for key operations.

4. Choosing the Right Buyer: Financial vs. Strategic vs. Internal

Not all buyers are created equal. Some want to integrate the business into their existing operations, while others will maintain it as-is. Some will prioritize keeping employees and leadership intact, while others will make major changes.

Common buyer types:

Strategic Buyers (competitors, suppliers, industry players) – Typically offer higher prices but may absorb the business into their own brand.
Financial Buyers (private equity, family offices) – Often keep the brand intact but focus on scaling and exiting in the future.
Employee or Family Buyouts – Keeps ownership in familiar hands but may involve complex financing.

Many families don’t just want to sell for the highest price—they want to ensure continuity for employees, customers, and the business itself.

✅ How to handle it: Know what matters most to you in a sale and structure the deal accordingly. If legacy and continuity are priorities, prioritize buyers who align with those values.

5. Preparing for the Emotional Side of Selling

For many founders, selling the business isn’t just a financial transaction—it’s an identity shift. If you’ve spent decades running the company, stepping away can feel like losing a piece of yourself. It’s common to feel:

Regret. A sense of loss or regret, even if the deal is a success.
Anxiety. Anxiety about what comes next.
Pressure. Pressure from employees, customers, or community members who don’t want things to change.

Many founders focus so much on closing the deal that they don’t think about what happens after.

✅ How to handle it: Start planning for life after the sale before the deal closes. Whether it’s consulting, investing, starting a new venture, or taking time off, having a plan makes the transition easier.

Final Thoughts

Selling a multi-generational family business is more than just a financial decision—it’s about legacy, relationships, and ensuring the next chapter is the right one. The process is complex, but with the right preparation, it’s possible to structure a deal that honors the past while securing the future.