A successful family-owned business was at a critical juncture. The father, owning 100% of the business, was uncertain about its future. Should he and his wife sell the business and provide financial support for their children, or pass it down to the next generation? Adding to this complexity, only one son was actively working in the business, while the other children were not involved.
At this point the family faced numerous obstacles:
No formal plan or structure existed for transferring ownership to the next generation.
The parents’ financial needs and the business’s ability to meet them post-transition were unclear.
Implementing fairness for non-involved children without compromising the business was a concern.
The business lacked a structure to operate independently of the father’s day-to-day involvement.
Using our Clarity Foundation™, Interchange took the following steps to guide the family through this transition:
Conducted comprehensive assessments of the family dynamics, business operations, and financial history including:
Analyzing cash flows for the parents’ financial stability
Understanding each family member’s unique needs and goals
Developed a one-page strategic plan for the business, creating alignment across generations and establishing clear business objectives.
Built an operational framework to facilitate a seamless transition, identifying leadership roles and training needs for the next generation.
Created a financial model to match the business’s growth potential with the parents’ cash flow requirements, allowing for sustainable operations while meeting family needs.
Designed a phased and disproportionate ownership transfer plan with equity structures that balanced active and passive family involvement.
Established an advisory board to provide strategic oversight and allow the father to remain involved at a high level.
Assisted in identifying and hiring key leadership to support the next phase of business growth.
Today, the family continues to work with Interchange to refine their strategy and maintain a strong foundation for the business and their legacy.
For personalized guidance on your family business transition, contact Interchange Capital Partners.
Interchange Capital Partners, LLC is registered as an investment adviser with the Securities and Exchange Commission (SEC). This communication should not be deemed as an offer or solicitation to buy or sell any product. Interchange Capital Partners, LLC does not provide legal, tax or accounting advice. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability.
