Family members staying on after a sale?

October 08, 2025

by a searcher from University of Michigan - Ann Arbor in Ann Arbor, Michigan, United States

I’m looking at a few businesses where family members of the seller are key employees (ex. the owner’s son manages operations or the spouse runs bookkeeping) that intend to stay on after a sale. I feel like sometimes it can be awkward, especially if the son is in a leadership role and viewed as heir apparent. I’m wondering if I’m unnecessarily overlooking good businesses because of the potential for drama. I’d love to hear from those who’ve been through this. How did you approach this situation and what were the big challenges?

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Reply by an investor
from New York University in New York, NY, USA

I am an investor in a business that had similar dynamics - 3/10 employees were family members (including the owner). I would be hesitant to invest in a similar situation again. A few things to focus on: 1 - As others mentioned, you should assume that the “staying” family members will leave ASAP, either on their own or on your decision. So as you are doing your DD and assessing what the owner’s role is and how that will be replaced, you should be doing the same thing with the other family members. 2 - Given the family members will know about the sales process, I would push to meet them during your DD process. You can position this as you believing that they are critical to the future success of the business. You definitely need to assess the professional and personal fit, and how they will function when reporting to you as the owner. It’s possible some family members want to be given the opportunity to spread their wings professionally. It’s also possible they might not understand why they need to show up to the office on time. 3 - A larger number of family members working in the business could be indicative of a more “ingrained” culture, for good or for bad. I’m not just talking about the family members - the entire team will have been part of that culture. You are going to inherit that culture, and it could be very challenging to improve things without some significant bumps along the way. I don’t necessarily think this is a non-starter, but I suggest planning for the worst and deciding if that scenario is acceptable.

Reply by an investor
from Harvard University in Dallas, TX, USA

Definitely an area where mixed results is the norm. I had one good one and one much more difficult one. Though in the case of a lot of businesses from older owners, the company has become like a family. They have decades of bonds, good and bad. There isnt any way you'll find all that out pre purchase. (Think of how much a stranger would find out meeting with your own family in a limited number of hours where the family has a lot of upside to being united). My best experience of this, caused me to walk away. I insisted on having dinner with all of them and brought someone I really trusted just to observe. My gut told me there was something wrong. He confirmed he felt the same. They sold to someone else and ended in a multi year court case. I dont think due diligence or outside parties help too much. And if its brokered, all but the best, most honest, will play the part of hiding the stories. If they won't all have dinner together with you......then that tells you something loud and clear .

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