7 Questions to Ask Yourself Before You Sell to Your Family
TIP: Be sure that you perform your own due diligence on the prospective buyer. Check credit ratings, management experience, and reputation. This is especially important if you plan to take payouts over an extended period.
Passing the business on to your children isn't always easy, particularly when they aren't all equally involved in the business, says Ronald Schmaedick of Schmaedick & Associates Inc. in Eugene, Ore. Before you sell to a family member, ask yourself:
- How can I treat all my children fairly?
- Who should own the business?
- Who should be CEO?
- Who will have voting control?
- How much money will I get from the business? When?
- How long am I prepared to personally indemnify—or guarantee—the creditors or the company?
- What are the income ramifications of this plan?
Adapted from “Exit Strategies, REALTOR® Magazine, October 1998 and November 1998
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