SHOULD YOUR BUSINESS REMAIN IN THE FAMILY?

Why an external sale is sometimes the most responsible act of stewardship a family business owner can perform.

Is selling the family business externally a sign of failure?

The narrative we have inherited tells us it is. The continuity story, first generation founds, second generation builds, third generation refines, fourth and fifth preserve, is the story that the family business industry, and very often the family itself, treats as the only legitimate outcome. The patriarch who hands the enterprise intact to the next generation is the hero of the inheritance. The one who sells it externally has, by implication, failed. Failed the founder. Failed the family. Failed the legacy.

This is a powerful story, and it becomes dangerous when treated as the only legitimate outcome. It conflates continuity with success in a way that the advisory industry, whose business often depends on the continuity assumption, has little structural incentive to examine.

The question almost no family asks

There is a question that Kenneth Kaye argued must be asked in every family business advisory engagement, and it is the question that most families never ask. Should this business remain in this family? Not can it. Not how do we arrange the trust deed, the succession plan, and the shareholders' agreement so that it does. But should it? And if not, what is the most responsible thing to do with what has been built?

The conventional advisory industry operates on the assumption that the answer to Kaye's question is yes. The governance is improved, the succession plan is documented, and the legal and tax architecture is refined. None of this is wasted work. But it all presupposes the answer before the question has been asked. And in a significant proportion of cases, Kaye's own research suggested that, among families whose best course was to sell, only 11 per cent actually did so, meaning the assumption of continuity actively harms the family it is intended to serve.

Eleven per cent. The figure deserves a moment. Among the families for whom an external sale was the responsible course, fewer than 1 in 9 were able to follow it. The other 8 stayed in. They renegotiated, restructured, leveraged, and fought. They preserved the appearance of continuity at the cost of capital, of relationships, and not infrequently of the enterprise itself. The pattern is so consistent that it cannot be explained by the character of individual families. It is structural. The continuity narrative is doing the work that the families are unwilling to do themselves.

The doorway hidden inside the ability to pay

Glenn Ayres, the American attorney and family business adviser who developed the concept of rough corporate justice, framed succession around 2 questions: NEED and ABILITY TO PAY. The principal asks what they honestly need to leave. The business answers what it can honestly afford to give. When those 2 figures meet, the transition has a structural chance of success. When they do not, the transition will extract more from the enterprise than the enterprise can sustain, and the next generation will inherit the deficit.

There is a third question implicit in the second one, and it is the doorway to everything that follows. If the business cannot afford to provide what the departing generation legitimately needs without compromising the capital base required by the next generation, what does that tell us? It does not, in the first instance, tell us anything about the principal's character. It tells us about the business. It tells us that the enterprise has reached a point at which it can no longer underwrite both generations simultaneously. It tells us that the structural conditions for an intrafamily transfer have ceased to exist.

That recognition does not make the principal wrong, or greedy, or insufficiently sacrificial. It does not make the successor unworthy. It is a property of the system, not a verdict on the people inside it. And it is the moment at which Kaye's question becomes unavoidable.

A family that did everything right

The Ackerman family and Pick'n Pay illustrate the point with uncommon clarity. Raymond Ackerman built Pick'n Pay from 4 small Cape Town supermarkets, acquired in 1967, into one of Africa's largest grocery retailers, with hundreds of stores and tens of thousands of employees across the continent. The family was committed, capable, credentialed, and present in the enterprise for four decades. 3 of Ackerman's 4 children held significant roles. The family retained majority voting control and the contractual right to nominate the chairman, the chief executive, and the chief financial officer. By every conventional measure, this was a model succession. The advisory industry would have pointed to it as an exemplar.

And the business declined. Market share eroded. Strategic initiatives failed. By 2024, the group reported a comparable trading loss of approximately USD 104 million. The family injected roughly USD 69 million from personal borrowings to fund a rescue, then progressively diluted their ownership to recover the cost. The succession that every structural indicator said would succeed did not succeed. Whether the emotional, psychological, and identity dimensions of the transition were adequately addressed as primary risks, the public record does not resolve. What it does show is that structural credentials alone were not sufficient.

The Ackermans did not choose to relinquish control of Pick'n Pay. The economics of decline chose for them. The distinction between a deliberate exit and a forced departure is not a matter of vocabulary. It determines the emotional architecture of everything that follows. A family that sells from a position of strength preserves its wealth, its cohesion, and its dignity. A family forced to dilute from a position of crisis loses all three.

A family that asked the question

The contrast worth holding alongside the Ackermans is the Oppenheimers. For more than eighty years, the family had controlled De Beers, the company that had defined the Oppenheimer name and the South African diamond industry. By 2011, with the third generation in the chair and the fourth working alongside, the family was not in crisis. It was at the height of its capacity. And it chose to leave.

In November 2011, Nicky Oppenheimer announced the family's agreement to sell its remaining 40 per cent stake in De Beers to Anglo American for approximately USD 5.1 billion in cash, ending eight decades of family ownership of the diamond industry. He described it as an extraordinarily difficult decision, but one taken deliberately, in unanimity, and in what the family judged to be its long-term interests rather than the industry's expectations of it. The transaction was completed in August 2012.

What is striking, in this context, is not the price or the timing but the architecture of what came afterwards. The proceeds did not retire into consumption. They were converted into a structure designed to outlast the founders of it: Oppenheimer Generations as the family investment platform, Tana Africa Capital as the long-term private equity vehicle for the continent, and the conservation work centred on Tswalu Kalahari, where stewardship of the land has replaced stewardship of the company. The Oppenheimer name remains a presence in South African public and economic life, but it no longer rests on a single industrial vessel. It rests on what the family chose to do with the capital, and the time at which the exit was released.

There is no useful judgment to be made between the Ackermans and the Oppenheimers. The 2 families faced different structural conditions, different industries, different generational dynamics, and different windows. What separates them is not character or competence. It is that one chose to ask Kaye's question, and act on the answer, while the answer still had options attached to it, and the other did not.

The most loyal exit

The cultural assumption that continuity is the test of legacy mistakes the vessel for the cargo. The business is a vessel. It is not an identity. It is not the family. It is not the measure of a life. When the vessel has served its purpose, when its structural conditions can no longer underwrite the next generation, or when carrying it forward would compromise the successor's developmental wholeness, releasing the vessel is not failure. It is the completion of stewardship.

Bill and Will Bonner, in their study of multigenerational wealth preservation, observe that successful old-money families think of themselves as stewards rather than owners of their capital. They do not spend the principal. They do not retire into consumption. They convert what they have built, when the moment requires it, into a form that can outlast them. The deliberate external sale, executed from strength rather than from crisis, is one of the cleanest expressions of that posture available to a family business.

The proceeds become a different kind of legacy: liquidity that preserves optionality for the next generation rather than obligation. The capital base, which an undercapitalised intrafamily transfer would have eroded, is preserved intact. The relationships, which a forced dilution would have damaged, are kept whole.

This is not the easier path. To choose it, the principal has to relinquish the cultural identity of patriarch as perpetuator. The family has to accept that the enterprise has been the means and not the end. And the advisory team has to give up the engagement that the continuity assumption would otherwise have produced. A few of those releases are comfortable. None of them is a failure.

What would it cost your family to release the enterprise from family ownership, deliberately and from strength? And what is it already costing you not to ask?