Taking over a family business

There are a lot of family businesses in the Netherlands. A business is considered a family business if at least two of the following three characteristics apply:

More than fifty percent of the business is owned by a single family
A single family has a decisive influence on the business strategy or succession decisions
A majority, or at least two members of the management, come from a single family.

If the business has been in existence for less than ten years, at least one family member of the director must be employed by the company or hold an ownership interest in the company, in addition to the director/shareholder.

Are you taking over a family business? Then thorough preparation is essential. Taking over a family business is a complex process, in which advice and guidance are of the utmost importance. The experts at BrightOrange are happy to support you throughout the entire process, ensuring that taking over a business from family proceeds as smoothly as possible.

Taking over a business from family

Taking over a family business differs from the takeover of a standard business precisely because it involves family. The bond between family members is often strong, which means that emotional considerations are more likely to come into play during a family business transition. This also applies if the business is taken over by an outsider. After the takeover, the business is no longer a family business; the parents’ dream that their children will carry on the business does not come true. That is why advice and guidance from an external party, such as BrightOrange, is so important. The external party acts as a ‘buffer’. On the one hand, between the selling family and the prospective buyer, and on the other hand, between the family members themselves.

There are various conceivable scenarios for taking over a family business:

A family member takes over the business
An employee of the business who is not a family member takes over the business
An external person takes over the business
The family business is taken over by another company

Family business exit planning

The step-by-step process we follow when taking over a business from family is essentially the same as when acquiring a business that is not a family business. In a family business exit, this is the planning:

Exploratory phase

Based on your wishes and objectives, we determine the appropriate acquisition strategy and analyse how you wish to and are able to finance the acquisition of the family business.

Determining additional criteria

Together we determine which additional criteria apply when taking over a family business is under consideration. These may include matters such as:

Will all family members leave the business following the takeover?
What role does the selling family play within the local community?
Which non-business-related expenses will still be accepted after the takeover?
Et cetera

Valuation and price negotiations

We analyse the value of the business and negotiate the price. This primarily concerns the influence of the family nature of the business and, consequently, the price. Finally, we discuss the financing of the purchase price. Following the submission of a non-binding offer and its acceptance by the selling family, the letter of intent is signed.

Coordinating due diligence

Due diligence involves a comprehensive review of the family business. This requires a great deal of information, such as the commercial and legal context in which the business operates, the often informal and/or verbal agreements with family members and employees, historical figures and the tax situation. A team of experts assesses this information and provides advice on any issues identified.

Final price determination

Following the due diligence, we negotiate the findings and determine the final price.

Contract negotiation and transaction documentation

A solicitor drafts – partly based on the due diligence findings – the draft contracts required for the transaction, after which we negotiate the terms with the selling family. A characteristic feature of family businesses is the emotional nature of these discussions.

Closing

The final step in the family business exit planning is the closing. In this stage, the contract negotiations have been concluded, the transaction documentation has been fully approved, and the financing is in place. Within a family business, this is a sensitive and emotional moment, during which tears are often shed.

If you have any questions about this roadmap for a family business transition, please do not hesitate to contact us.

Contact

Shaking Hands To Family Business Transition

Why choose BrightOrange for a family business takeover?

It’s fair to say that taking over a family business isn’t something that can be sorted out overnight. Building a good relationship between the buyer and the selling family requires time and a willingness to go through the necessary process of coming to terms with the change – or, in some cases, coming to terms with the loss – for the family. Make sure to take enough time for it. At BrightOrange, we have over 25 years’ experience in facilitating business takeovers, including those involving families. Think, for example, of transport companies. If you call on us, you can count on an experienced team with a dedicated partner and consultant who is always there for you.

Taking over a family business with BrightOrange

Together, we’ll ensure your family business transition is a success. We are also available for services such as business valuation and the selling of businesses. Would you like to know more about our services? Then please get in touch with us.