Easing Family Succession: How a Tailored Recap May Be the Answer

by Richard A. Vinci
Family and closely controlled businesses account for more than two-thirds of all businesses in the United States. Many family and closely held business owners start out with the admirable goal to pass the business on to their family members and/or long-term valued employees. Despite the genuine desire to see the continuation of the business in the family, only 30% of family owned businesses survive into the second generation and only 11% survive into the third generation with only 3% of all family businesses continuing through the fourth generation or beyond. These grim statistics have much to do with poor succession planning which is exacerbated by the lack of viable liquidity options for retiring family members.1As the statistics indicate, in most cases succession just happens rather than being planned thereby resulting in less than desired outcomes. Over the next decade, family-controlled firms will experience an unprecedented number of succession events. Since ensuring the continuity and success of the family enterprise is a top priority for most family business owners, these owners will be compelled to address some daunting and potentially unpleasant issues including, but not limited to, succession, control, tax planning and capital procurement for growth. Further complicating matters is the tendency for emotions to run quite high around the family succession of the business which can lead to messy litigation. More…

When Takeover Targets Become Takeover Artists

Equity Values are Falling. Instead of Panicking, Why not Buy Out a Competitor?

by François M. de Visscher

When it comes to mergers and acquisitions, family businesses usually think of themselves as potential targets, not acquirers. But now may be the perfect time to start thinking more like a potential buyer.

Several economic factors are converging to create a buyer’s market in the acquisitions arena:

  1. Valuations of private companies have dropped along with public valuations. When family companies see their own valuations diminishing, they often assume a defeatist attitude. It’s harder to create liquidity for shareholders. But the value of your competitors has likely fallen as well. That’s good if you’re a potential buyer. Instead of retrenching into a defensive posture, consider going on the offensive, by expanding or developing new lines and getting into new markets. Think of an acquisition as a different way to create value for future generations of shareholders.  More…