--- title: "Private Equity and Your Family Trades Business: Questions to Ask Before You Say Yes" description: "Use seven questions to decide whether a private equity partner fits your family trades business and what to get in writing before proceeding." url: "https://www.novatori.us/field-notes/private-equity-family-trades-business-questions/" source: "Markdown twin of https://www.novatori.us/field-notes/private-equity-family-trades-business-questions/ — generated for AI agents." --- Field notes # Private Equity and Your Family Trades Business: Questions to Ask Before You Say Yes Use seven questions to decide whether a private equity partner fits your family trades business and what to get in writing before proceeding. Published October 12, 2026 An investor wants to talk. One relative sees room to grow. Another worries about who will make decisions after the deal. Your crew still needs clear direction on Monday. Before discussing terms, write down three answers with the family members who own or run the business: - We want to protect: ______ - The business needs: ______ - A partner would need to provide: ______ Use those answers to test the proposed deal. Bring the questions below to the next meeting, then take the written terms to your own attorney and accountant. ## Seven questions to ask before you say yes ### 1. Who gets paid, how much, and when? Ask for a breakdown of the proposed price. It may include cash at closing, deferred payments, seller notes, earnouts, or rollover equity. [Katten describes these possible parts of a sale price.](https://katten.com/great-wealth-transfer-top-three-legal-considerations-family-business-owners-preparing-sale) For each part, ask who receives it, when, and under what conditions. Put the answers in writing. ### 2. Which decisions will the family control? Ask who will approve hiring and budgets after closing. [Seder Law identifies both as family-business deal questions.](https://sederlaw.com/private-equity-investment-in-family-businesses/) Also ask who will decide pricing, borrowing, and major spending. Write down any decision your family needs to keep, and compare that list with the proposed terms. If authority is already unclear within the family, start with [how to run a trades business with family](https://www.novatori.us/field-notes/running-a-trades-business-with-family). ### 3. What will each family member do? List every relative who expects to keep working in the business. For each person, ask: What are the duties and pay? Who assigns the work? Who can change the role? If family members stay in operating roles, their employment agreements should spell out duties, compensation, and reporting lines. [Seder Law addresses these terms for continuing family members.](https://sederlaw.com/private-equity-investment-in-family-businesses/) ### 4. What must happen for later payments to be made? An earnout is an additional payment made only if the business meets specified financial or operating targets after closing. [Friday Firm explains this condition.](https://fridayfirm.com/news/rollover-equity-and-earnouts-in-private-company-ma-transactions/) Ask what the targets are, who measures them, when they are measured, and what happens if the operating plan changes. Treat the amount as conditional until you understand the written terms. ### 5. Can the company take on more debt? Ask whether the company can incur significant additional debt, who can approve it, and how the payments would affect the operating plan. [Bean Kinney identifies additional company debt as a question to examine.](https://www.beankinney.com/news-and-insights/blogs/rollover-equity-in-a-private-equity-sale-four-questions-founders-need-to-ask/) ### 6. What growth plan would we be agreeing to? Ask the buyer to put its expectations in writing. Would the plan call for more locations, new service areas, more staff, acquisitions, or different financial targets? Which parts would your family be expected to run? Bring your operating records and business numbers to that discussion. [Systems to Scale Past $1M](https://www.novatori.us/field-notes/systems-to-scale-past-1m) can help you review how work gets done. The [Trades Business Financial Health Checklist](https://www.novatori.us/field-notes/trades-business-financial-health-checklist) can help you organize the numbers. ### 7. What happens if the relationship stops working? Ask what the written terms say if a family member leaves, loses a role, misses a target, or disagrees with a major decision. If the family keeps equity, ask what ownership position it would hold and which decisions that position allows it to make. A founder who retains equity after a private equity sale may hold a minority interest. [Bean Kinney discusses that possibility.](https://www.beankinney.com/news-and-insights/blogs/rollover-equity-in-a-private-equity-sale-four-questions-founders-need-to-ask/) ## Hypothetical: two families, two choices One family decides it must keep authority over hiring. The proposed terms would transfer that authority, so the family declines. Another family wants help with a growth plan it supports. It considers proceeding after receiving written answers and having its own advisers review the terms. Neither choice is automatically right. Compare the proposed terms with what your family wrote down at the start. ## Save this list for the next meeting Get written answers covering: - Who receives each payment, when, and under what conditions - Earnout targets and how they are measured, if an earnout is proposed - Any retained equity and the resulting ownership position - Authority over hiring, pricing, budgets, borrowing, and major spending - Each continuing family member’s duties, pay, and reporting line - Who can approve additional company debt - Growth targets and who is expected to deliver them - What happens if someone leaves, disagrees, or the plan changes Bring the answers and proposed agreements to your own attorney and accountant before you agree to terms. An attorney should review a business sale agreement for accuracy and completeness. [The U.S. Small Business Administration recommends that review.](https://www.sba.gov/counseling/manage-your-business/) Keep going ## Want to talk through what you just read? Tell us how your business runs today, and we’ll talk through how this applies to it. [Talk to us](https://www.novatori.us/contact)