Over the past few years, I have observed a growing number of family businesses in West Michigan being sold, primarily to private-equity firms. The reasons vary. In some cases, there were no next-generation family members interested in taking over, either as managers or shareholders. In others, even when the next generation was actively involved in both management and ownership, the business required substantial investment to stay competitive, an investment the family could not provide alone. Because families typically prefer to retain control by holding at least 51% of the business equity, they sometimes choose to sell altogether rather than dilute ownership. In other instances, the decision resulted from a mix of these factors or simply an exceptionally attractive offer.

My focus here is on the impact of these liquidity events on business families and the entrepreneurial mindset that once launched the family enterprise. More specifically, I am interested in understanding the effects of experiencing a significant liquidity event after having most of the family’s resources invested in the business as patient capital. The decisions made afterward, and their implications, warrant deeper reflection.

What Happens After the Sale

In the best-case scenario, a business family takes time to determine how to deploy its new liquidity to achieve both individual and collective goals. Depending on the family’s situation, decisions often involve professional advisors, diversification strategies, estate and tax planning, and financial education for the next generation. Philanthropic planning is another key consideration, and when the liquidity event is substantial, many families establish a family office, an organization that provides wealth management services of one or several enterprising families, that may also offer planning, philanthropic guidance, concierge support, and other services depending on each family’s needs. (Rosplock, 2020).

From my experience in West Michigan, family offices are as unique as the businesses they stem from. Some focus strictly on investments, tax, and estate planning, while others act more broadly as custodians of family traditions and values. This diversity mirrors broader findings in the literature showing that family offices evolve according to the family’s goals and governance maturity (Monteiro & Miranda, 2023). Regardless of scope, quoting a West Michigan business owner, the guiding principle remains it is not just about the money, it is about the values.

How to Redefine Ourselves

After selling a family business, former owners, especially those who dedicated their lives and careers to it, may feel as though they have lost a significant part of their identity. Research shows that family members often experience an identity void after an ownership exit, followed by a period of redefinition (Zellweger, Nason, & Nordqvist, 2012).

I have spoken with individuals who were once the “next generation,” became the “now generation,” and ultimately found themselves the “has-been generation,” still years from retirement but unsure of what comes next. While financial security helps, many feel adrift. Yet this transition also brings opportunity, a chance for reinvention and renewed purpose.

Remaining a Business Family

For many, selling the family business feels like losing the family legacy. While that reaction is understandable, it can also mark the beginning of a new chapter. The sale can free the family to remain entrepreneurial, this time without the constraints of the original industry. This shift can reengage the next generation, not only in philanthropy but also in new ventures that align with their evolving interests. Families have found creative ways to do this: educational initiatives, pitch competitions, and impact-investing boards have become best practices (Nordqvist, Zellweger, & Habbershon, 2010). A family can continue being a business family even without the legacy enterprise, by launching or supporting entrepreneurial ventures together or individually.

Developing Ownership Competence

Research has provided substantial insight into how family managers shape firm strategy, but less attention has been given to the capabilities that families must develop regarding what to own, how to own, and when to own, a concept known as ownership competence (Foss, Klein, Lien, Zellweger, & Zenger, 2021).

Ownership competence is the ability to make strategic ownership decisions, not merely operational ones. Many families professionalize management and governance but spend less time cultivating competent owners. Developing ownership competence requires a mindset that goes beyond tax or estate planning. It involves asking, “Why do I, or we as a family, own this business, holding, office, or foundation?” As Foss et al. (2021) explain, ownership competence bridges the economic logic of resource allocation and the behavioral logic of stewardship. From what I have seen among West Michigan business families, their answer is rarely “for the money alone”, but it is an essential question every owner should be able to answer.

A Local Story of Reinvention

In a forthcoming chapter I co-authored for the Handbook on the Family Office and Wealth Management, edited by Marta Widz, Alfredo De Massis, and Nadine Kammerlander, my colleagues and I describe how a West Michigan family faced this challenge (González L., Michiels, James, & Welsh, forthcoming). Pressured by industry changes that made continued ownership unsustainable, the patriarch, trained and experienced in leading the business, had to sell. Though he could have retired comfortably, he sought purpose. Partnering with his son, he pursued new ventures until they found one that fit, a new enterprise now operating successfully alongside their family office, the latter located in West Michigan as most of their philanthropic efforts. He views his family as stewards of resources built over generations, committed to adding value not through the legacy business but through the family legacy itself, one of building, growing, and giving back. His focus now is on developing ownership competence in his grandchildren to ensure stewardship for generations to come.

Conclusion

In the end, selling the legacy family business can be an emotional journey and understandably so. However, it can also open new doors for the current and next generations to work together in shaping a new family enterprise and ultimately preserving the family’s entrepreneurial spirit and strategic mindset about ownership (Nordqvist et al., 2010; Zellweger et al., 2012). It is important for business families to be aware that legacy is not what is sold, it is what is continually rebuilt.

Foss, N. J., Klein, P. G., Lien, L. B., Zellweger, T., & Zenger, T. (2021). Ownership competence. Strategic Management Journal, 42(2), 302–328. https://doi.org/10.1002/smj.3222

González L., A. C., Michiels, A., James, A., & Welsh, D. (forthcoming). Leveraging family offices as catalysts for renewal and regeneration: Adding value beyond the family business. In M. Widz, A. De Massis, & N. Kammerlander (Eds.), Handbook on the Family Office and Wealth Management. Cheltenham, UK: Edward Elgar Publishing.

Monteiro, G. F. A., & Miranda, B. V. (2023). Disentangling the role of the institutional environment in the ownership-competence framework: A comment on Foss et al. (2021). Strategic Management Journal, 44(8), 1939–1954. https://doi.org/10.1002/smj.3612

Nordqvist, M., Zellweger, T., & Habbershon, T. (2010). Transgenerational value creation: Exploring the role of purpose and continuity in family firms. Family Business Review, 23(2), 119–134. https://doi.org/10.1177/0894486510364161

Rosplock, K. (2020). Introduction to the family office. In The complete family office handbook: A guide for affluent families and the advisors who serve them (2nd ed.). John Wiley & Sons.

Zellweger, T. M., Nason, R., & Nordqvist, M. (2012). From legacy to renewal: Entrepreneurial families in transition. Journal of Family Business Strategy, 3(4), 231–245. https://doi.org/10.1016/j.jfbs.2012.10.001