Recently a trucking business owner approached me with a dilemma. He expressed that he wants to sell his business and that his son wants to buy it. However, the owner fears that his son can not afford it. Although he likes the idea of his son buying his trucking business, he is convinced that any deal with his son would require him to neglect what his best for he and his wife: retiring, cashing out, and taking chips off the table.
He asked if I could help. I responded with two questions.
1) How do you know your son doesn’t have the financial wherewithal to purchase the trucking business?
2) If he can’t afford it, who do you want to deliver that message to your son?
He answered the first question with, “I don’t know.” The second question with “Anybody but me.”
This is a very difficult situation for multiple reasons. First, the owner is attempting to address a huge financial decision based on an assumption he admittedly revealed could be inaccurate (the value of the trucking business). Secondly, unless something changes in the status quo, the owner will lose no matter what he chooses to do. Either he greatly alters his retirement plans by selling to his son over time or he risks dividing the family by refusing to sell the trucking business to his son.
After listening to him, I made the following suggestions.
If the son cannot afford the business, he can’t afford it. He will likely be more accepting to that reality if the value of the trucking business is calculated by someone other than his dad. Further, if the third party appraisal demonstrates that the son cannot compete with likely offers from the open market, this approach allows both dad and son to be treated fairly in the process while avoiding unnecessary strain on the family.
Most importantly, once the facts surrounding a possible transfer of ownership are established, a seasoned transaction professional can help you identify and consider other strategic options related to the sale of your trucking business. These newly discovered options may help both family members accomplish their respective goals. Family succession recapitalization could be one of those options.
These issues are highly complex and super charged with emotion. Make sure you have the right professional involved to help you make educated decisions and to diffuse emotional tension between you and your family members through the process.
Spencer Tenney, vice president of The Tenney Group, is a member of the International Business Brokers Association and a Certified Business Intermediary (CBI). The Tenney Group is exclusively focused on business sales, acquisitions, business valuations and exit planning in the transportation industry.