Many family businesses may be going on the block


A new study based on a survey of over 400 family-owned businesses has found that almost half – 47% — are open to being sold within the next five years. It also notes that there are big differences in companies focused on the business side and those focused on the family side.

Ironically, the family-centric businesses are the ones most likely to consider being sold, and at the same time, are doing the least to make preparations for such a sale, such as taking steps to mitigate tax implications, according to financial services firm Rothstein Kass.

Many broadcast companies fall in the family business category, but only the larger groups would fit into the parameters of the Rothstein Kass study, which was taken during Q1 2011. It defined the respondents, saying, “All participating businesses are privately held, first-generation entities with a single family owning at least a 70 percent stake. Roughly 18 percent of participants report sales between US $10 and $30 million, and slightly more than 50 percent indicate sales between $30 and $100 million. The balance of respondents report average sales of $100 million or more.”

RK’s Tom Angell commented, “Our previous surveys of family business owners had discovered that even among those pondering a short-term sale, the majority had not taken adequate steps to prepare. Many suggested that family discord was both a motivation for considering a sale and one of the concerns most likely to derail the process.”

Angell continued, “At the same time, we encountered a number of businesses that were less affected by family strife due to their unwavering focus on enterprise management.”

Angell noted that the less family-oriented, the better the company was likely to be as a going concern. “Our latest research delved deeper into the family business community to explain this phenomenon. In the process, we discovered that over 40 percent of family businesses are so in name only, with family members not actively involved in managing the business. Isolating legitimate business objectives from family issues and other outside distractions better positions the enterprise to support long-term objectives. The benefits of this strategy are apparent throughout the life span of the business, and can support a more orderly and profitable sale, whether owners ultimately intend to sell to private equity funds, strategic buyers, or transfer the asset to family members.”

RBR-TVBR observation: The sale of a broadcast family business brings a whole set of obstacles to overcome – the chief ones being the necessity of clearing various regulatory hurdles (such as local ownership caps) and bringing aboard a few of those elusive financial backers.