As discussed in the article “M&A in family-owned companies: Separating the family from the company in negotiations,” it may be beneficial to the buyer to keep the family inside the company. However, as mentioned in the article “M&A in family-owned companies: From owners to employees,” it may be difficult for the family to assimilate the change of roles. However, there is another alternative: partial sales.
The decision whether or not to sell 100% of the company will determine the structure of the transaction. As a consequence, this decision is very relevant in the negotiations for the drafting of the transaction agreement. We can analyze it from the point of view of each party. We can analyze it from the point of view of each party.
From the buyer’s point of view, it is common to opt for a partial sale because of the following. Family businesses are often attractive because of their market position and potential for improvement. In order to fully exploit this potential, investors see a great opportunity to work hand in hand with the families because of their extensive knowledge and the large network of contacts they have in the business.
From the seller’s point of view, partial sales are usually beneficial for two reasons. On the one hand, the inflow of new investments can help boost the company’s performance and the development of projects that could not be carried out with the previous funding. On the other hand, the decrease in the family’s share of total investments allows them to benefit from the investments without having to put their wealth at risk.
In the end, both the family and the buyer will find themselves benefiting from a partial sale, for which each party will focus on different issues. It will be the job of the mergers and acquisitions lawyer to find a way for both interests to be resolved. As for the seller, it will seek to take control gradually through organized structures and absorb as much of the family’s knowledge as possible. As for the family, it will seek to get the maximum benefit from the investors’ capital injection.