How We Helped a Family Business Navigate the 4 Interchanges

By Ahmie Baum, CFP® CFBA

As a business owner, you face a myriad of complex challenges as you navigate the 4 interchanges between yourself, your family, your business, and your ownership with each potentially having different outcomes and goals creating complexity. We’d like to share how we helped one family business with some of these issues.

The Client and Their Goals

Our clients were running a successful business that spanned multiple generations. As such, they were trying to lead the future chapter of the business and family’s success. While it was clear that the family wanted to ensure a smooth transition, there were a number of classic issues along the way: they wanted to groom and prepare the next generation, and improve the business without harming any family relationships; they were uncertain of the estate, tax, and legal ramifications of this transition; they wanted to lower the family’s concentration in the business; and they wanted everyone ready for the transition.

How We Helped

As the family’s go-to advisory firm, we played a critical role in helping them address these wide-ranging and complex challenges.

First, they had to recognize that the complexity and obstacles were natural because they were navigating between the 4 interchanges of individuals, family, business, and ownership with each potentially having different outcomes and goals. In fact, they did not notice the interchange between the 4 and did not have the tools or structures to handle them. We helped them identify and build guardrails and maps to help navigate the interchanges effectively, which reduced some of the complexity.

The first set of guardrails and maps addressed the individual: How are you coming into the interchanges? Specifically, what are your vision, fears, and strengths? When you move into action, how do you deal with information, organize the information, and deal with risk and uncertainty? These are unique to each individual and affect all interchanges. Starting with the individual interchange, guardrails and maps help develop clarity and understanding to effectively navigate the other interchanges.

One of the guardrails and maps for the family interchange was to encourage the family to establish regular family meetings with agendas and explore developing a conflict-resolution process. This would allow the family to bring up issues at the right interchange clearly and transparently to minimize other interchange issues hindering the process.

The business interchange required the need to professionalize certain parts of the company: operations, finance, and marketing. We used market intelligence and strategic planning so the family could make more informed decisions about the future of the business and evaluate potential areas of improvement. We are also currently in the process of assisting them in establishing a board of directors with a mix of family and non-family members to provide independent oversight and structure

Sometimes the interchanges overlap, such as when dealing with estate and gift tax issues. By working closely with tax and estate planning experts to minimize the tax impact of transferring ownership and to establish trusts to manage the distribution of assets, we verified that the family understood the language and structure of these trusts and ownerships and the outcomes so they were comfortable moving into action.

At the ownership interchange, this family was looking to diversify the ownership base, as well as lower the concentration of wealth the family had in the business. We helped them create an action plan to invite non-family members to invest in the business and offered equity-based incentives to key employees.

The Outcome

Through our work on these issues (and more), the family was able to navigate the 4 interchanges with guardrails and maps that offered tools, and structures to address complex challenges. As a result, they each feel more confident in the future of their business, as well as in their family dynamics and ownership. Everyone is looking forward to building a bigger future together.

Does Your Family Business Know How to Navigate the 4 Interchanges?

If you’re not experiencing the progress you are looking for regarding your family, business, and ownership, Interchange Capital Partners would be happy to discuss ways in which our guardrails and maps can assist you in navigating the various interchanges. To schedule an introductory conversation, you can email me at team@interchangecp.com or call our office at 412-307-4230.

About Ahmie

Ahmie E. Baum is the CEO and Founder of Interchange Capital Partners. Using a collaborative and comprehensive process developed over 43 years of working with wall street banks and financial services firms on behalf of families.

Interchange Capital Partners provides family office and transition strategy services for family businesses, helping families protect and grow their family capital with clarity, understanding, and action by being relevant and resourceful around their unique circumstances.

As a graduate of the University of Pittsburgh, Ahmie began his career with EF Hutton in 1979 and transitioned to UBS in 1993. Ahmie is a CERTIFIED FINANCIAL PLANNER™ (CFP®), received the Executive Certificate in Financial Planning from Duquesne University School of Leadership and Professional Advancement and has a Certificate in Family Business Advising (CFBA) from the Family Firm Institute. He also has Certificates from The Growth Institute around Growing and Scaling Business and Cash Management. For the past 20 years, he has been involved with Strategic Coach, an international entrepreneurial training program

When he’s not working, Ahmie enjoys spending time with his wife, Sara, their three children, and their granddaughters. He recognizes that health is wealth so he has committed to daily yoga, meditation, and plant-based eating. His other hobbies include woodturning, golf, reading, listening to music, and biking. He is active in his community and served as the Foundation Chair of the Jewish Federation Community Foundation of Greater Pittsburgh and supports the Big Brothers Big Sisters of America (BBBS). To learn more about Ahmie, connect with him on LinkedIn.

Interchange Capital Partners, LLC, (“INTERCHANGE CAPITAL PARTNERS”) is a registered investment adviser with the Securities and Exchange Commission providing investment advisory and financial planning services. Any reference to the terms “registered investment adviser” or “registered” does not imply that INTERCHANGE CAPITAL PARTNERS or any person associated with INTERCHANGE CAPITAL PARTNERS has achieved a certain level of skill or training. A copy of INTERCHANGE CAPITAL PARTNERS’s current written disclosure (ADV 2A Firm Brochure) discussing our advisory services and fees is available for your review upon request. INTERCHANGE CAPITAL PARTNERS, in addition to providing investment advisory and financial planning services, provides business consulting services. In connection with its business consulting services, INTERCHANGE CAPITAL PARTNERS does not provide tax or legal advice.

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