After Divestiture: Shifting Your Focus from Investing in the Family Business to Investing in Financial Security

After Divestiture: Shifting Your Focus from Investing in the Family Business to Investing in Financial SecurityNortheastern University

Family Business Quarterly
by Michael Winter and Josh Gold
Bear Stearns

Relinquishing control of the family business that the owner has spent a lifetime building is both a complicated and painful affair. Part of what makes it difficult is deciding what to do with the proceeds from cashing out.

The principal of a family business typically has had the majority of his or her personal net worth invested in the company for many years. This individual hasn’t had either the time or the inclination to become well versed in the public financial markets.

Yet senior members of family businesses are often thrust into the position of having to provide both income and future financial security for themselves and their spouses. Ensuring personal financial security as the business is either passed to the next generation or transferred to outside sources demands thorough attention and due diligence, even for someone experienced in the ways of the public markets. More…