Matsebe Thulare | Private Equity Transactor | RMB Corvest | mail me |
Most advice about selling a business focuses on the seller as an individual. It considers the founder, the entrepreneur, or the person whose name appears on the door. However, family businesses complicate that picture.
The person sitting across the table from a buyer represents more than themselves. They represent a family. In my experience, family members rarely approach a sale with the same objectives.
I’ve sat through enough of these processes to recognise the pattern. Family shareholding pulls in three directions at once: family, shareholders and management. Everyone must understand these interests before approaching a single buyer. The technical work, including due diligence, the term sheet and legal negotiations, can only proceed once the family settles these matters. Therefore, the hardest negotiation in a family sale often isn’t with the buyer. It’s the negotiation the family has with itself, before a buyer even enters the room.
Aligning the family before approaching buyers
That conversation rarely comes easily. One generation may be ready to sell, while another wants to stay and build. Siblings may disagree about timing, price, and what “done” actually means. If the family leaves these differences unresolved, they won’t remain contained. Instead, they tend to surface midway through the process, usually at the worst possible moment. The market needs to meet one family speaking with one voice.
Practically, this means agreeing early on who will represent the family as a group. This helps prevent valuation expectations, sell-down proportions, and questions about roles and remuneration from becoming potentially fatal flaws as negotiations progress.
Where some family members intend to remain involved, that commitment can even become a selling point. It offers a succession story that a buyer may find attractive rather than a complication to manage.
Exploring alternatives to an outright sale
Selling a family business doesn’t always require choosing between selling everything and selling nothing. A partial sale or recapitalisation, which we regularly use in the mid-market, allows a family to realise meaningful cash while retaining a genuine stake and a seat at the table. An institutional partner can then contribute capital and governance to fund the next phase of growth.
In some cases, the next generation already works in the business and wants to increase its ownership rather than sell out. We’ve structured gearing specifically for these shareholders to increase their participation.
The logic is straightforward: retained shareholding tends to strengthen everyone’s conviction in the business’s future, on both sides of the table.
Protecting value through the right deal structure
Structure matters just as much once the parties agree on a transaction price. Deferred payments, earn-outs, lock-ins, retained equity and continued management involvement determine whether the deal protects the family’s legacy or merely preserves its appearance.
In my view, rolled equity with genuine governance rights offers the most honest form of protection. The sellers’ interests align with the buyer’s through the same instrument, while the sellers retain the opportunity for a genuine second bite at the cherry.
Earn-outs can also work as a pricing bridge for a family that genuinely believes in the business’s future earnings potential. However, the parties must ensure they can verify future figures easily, rather than argue over them later.
Choosing a buyer with the right investment horizon
Underlying these considerations is a question that has less to do with family dynamics than with the type of capital financing the purchase. A buyer working against a fund’s deadline behaves differently from one without that constraint. Families can usually sense this difference long before it appears in a term sheet.
A fund in year seven of a ten-year life needs to realise its investment. That pressure changes every decision. Capital expenditure with a longer payback period becomes less attractive.
Working capital management starts prioritising the exit over the business. Meanwhile, the buyer may quietly defer growth spending that would reduce near-term earnings.
A transition that builds on a family’s legacy
We benefit from using a captive fund model. This means we can genuinely afford to accept a weaker set of numbers in one year if that produces a better business over the longer term. With us, a family can plant trees rather than harvest them according to someone else’s calendar.
For example, our investment in Aquatico illustrates what a well-managed transition can look like. In 2012, we invested alongside the founding family of this environmental monitoring, testing and reporting business, in partnership with Agile Capital. Over the following thirteen years, Aquatico expanded beyond South Africa into the rest of the continent and broadened its service offering.
We funded and nurtured that growth rather than extracting returns at the expense of the business. Management remained in place throughout, and we preserved the technical culture that made the company valuable. When we exited in 2025, the business moved to a strategic owner with the balance sheet to take it further than we could.
That is what a good transition looks like. The changes in ownership compounded the founders’ work rather than interrupting it.
Looking beyond the highest offer
For a family considering selling a family business, that may be a more useful test than price alone. The key question isn’t simply whether the family receives the highest offer. It is whether the business, and the family behind it, remain resilient, aligned and ready to grow after the deal closes.
Ultimately, selling a family business should involve more than negotiating a price. It should also protect the family’s legacy, respect the people who built the company, and create a foundation for its next phase of growth.