(Time to read this Blog section is about 40 seconds)
Selling to ‘the kids’ generally means a payout over time and, therefore, requires a very sober judgment as to whether ‘the kids’ have the ability and drive to grow the business so that you actually get your money.
Some years ago, a very clever friend of mine who was selling to his adult kids, knew that they would probably fight among themselves and wreck the business. Plus their industry was under severe pressure from offshore competition and sales and profits were declining.
So, he sold the business to his kids but told them to go to the bank and borrow the money to pay him out, up front. Sure enough, the biz went bust in a few years and the kids are now suing each other over who’s responsible for the company’s demise. A real mess.
In the meantime, the father had his cash and built a big house in the mountains, far away from all the squabbling back home. So, be realistic about the future of your industry and the ability of your kids to pay you what they owe, on time. You do the kids no favour selling them a business that they can’t make a go of.
