Selling a Family-Owned Business: Legal Considerations Before you Say Yes
- 9 hours ago
- 3 min read
For many business owners, selling isn’t just a financial decision. It’s personal.
A family-owned company often represents decades of work, risk, reinvestment, sacrifice, and identity. It may have supported multiple generations. It may employ people who feel like extended family. And in many cases, the owner never intended to sell at all.
Then the call comes.
An interested buyer.A competitor.A private equity group.An unexpected opportunity.
Before you say yes, or even “maybe,” there are several legal and practical considerations worth thinking through.
1. Confidentiality Comes First
The moment you express interest in exploring a sale, information begins to move.
Buyers will request financial statements, customer lists, contracts, vendor relationships, intellectual property, and operational details. That information is sensitive and, once shared, it cannot be unshared.
Before providing anything:
A properly drafted Non-Disclosure Agreement (NDA) should be in place
The scope of what can be shared should be clearly defined
You should understand who will have access to the information
An NDA is not a formality. It is the first layer of protection for the business you built.
2. Understand What Is Actually Being Sold
Not every sale looks the same.
Is this an asset sale or a stock sale?Are you selling the entity itself or only certain assets?What liabilities remain with you after closing?
These distinctions affect:
Tax consequences
Ongoing exposure
Employee obligations
Real estate and lease assignments
Existing contracts
The structure of the deal matters just as much as the price.
3. Tax Planning Should Start Early
Too many owners wait until a deal is nearly finalized to involve tax advisors. That can be costly.
Coordinating early with a CPA or tax attorney allows you to:
Evaluate capital gains exposure
Explore installment payments or structured payouts
Plan for estate and succession implications
Understand how proceeds will flow to you personally
In some cases, small structural decisions made early in negotiations can significantly affect the net result.
4. Think Beyond the Closing Date
A sale rarely ends at closing.
Many transactions include:
Earn-outs
Seller financing
Ongoing consulting agreements
Non-compete provisions
Transition periods
You should be clear about what your role, if any, will be after the sale. Some owners want a clean exit, while others prefer a phased transition. Both are valid, but they should be intentional.
5. Protect the Legacy and Not Just the Price
For family businesses especially, the highest offer is not always the best offer.
Owners often care about:
How employees will be treated
Whether the business name will remain
How customer relationships will be handled
Whether the culture will survive
These concerns can and should be addressed in negotiations where possible. Price matters, but so does stewardship.
6. Do Not Negotiate Alone
Even experienced business owners can underestimate how quickly negotiations evolve.
A Letter of Intent (LOI), for example, may appear non-binding, but it can meaningfully shape the final agreement. Terms agreed to early can and will limit flexibility later.
Having experienced counsel involved from the beginning helps you:
Evaluate the seriousness of the offer
Identify risks before they become problems
Negotiate from a position of clarity rather than urgency
Selling a business is often a once-in-a-lifetime transaction and it deserves careful attention.
A Final Thought
Many owners spend years building something of value and only weeks preparing to sell it.
If you are even considering a sale, the best time to begin thinking through the legal and structural implications is before you feel pressure to decide.
A thoughtful process protects not just your assets, but your future.
If you’re exploring a transition and want to understand your options before you say yes, we’re here to help you think it through.
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