Selling A Family Business to Family

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Selling A Family Business to Family

Mergers and acquisition activity continues to move along at a fast clip despite rising inflation rates and other economic pressures. An abundance of investment capital, strong equity markets, and a generational shift with Baby Boomers are some of the driving forces behind this. Family business plays a key role in this economic pressure.

A Guidant Financial report stated that well over half of businesses in the United States are owned by Baby Boomers. With estimates of more than 75 million Baby Boomers set to exit the workforce in the years ahead, there will be plenty of profitable and established businesses up for sale. The business law attorneys at Manning & Clair have deep experience assisting business owners as they sell or buy a business. Please contact us to learn more; we would be happy to help you navigate the process.

Keeping Family Business in the Family

If the next generation is ready and willing to take over the family business, then it is time to work with an experienced attorney to ensure the process goes smoothly for everyone. It is important to remember that there are different ways to keep the family business in the family. Our Cleveland business attorneys can help you decide which path is best for your situation.

Some business owners want to transfer the ownership of a business while they’re still alive, but they also want to continue receiving income from the business. The answer, in this case, is to sell the business to family (i.e., children, siblings, nephews, nieces, etc.). They might not have enough assets of their own to buy the business for its reasonable value, but there are ways to deal with that.

Options for Selling a Family Business to Family

One option is to sell an interest in the business in return for a promissory note. The purchasing family members would pay off the interest and principal over time using income from the business. You would have a great deal of flexibility to structure the note in a way that meets your needs.

Other options include a sale of the business in return for a private annuity. This serves as a self-canceling note, but with different annual payments. Alternatively, you may give the family business to the family via a “grantor retained annuity trust.” This is when the trustee makes annuity payments to you for a term of years out of the profits of the business. This goes into effect after the trust ends, and the family becomes the new owners.

Contact Us

Manning & Clair Attorneys At Law have extensive experience providing expert legal counsel to Cleveland-area businesses of all sizes when it comes to buying or selling a business. Please contact us to get the help you need. We have the experience and knowledge to help you effectively run and eventually sell your business.

Manning & Clair Note: The information shared here is intended for a general overview and discussion of the subject. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. Please consult an attorney for advice about your individual situation.