A family-owned business approached Interchange Capital Partners seeking guidance on transitioning ownership to the next generation without disrupting business operations or personal finances. The business had a unique cash-flow cycle allowing it to operate without retaining significant cash reserves. However, the family faced challenges related to estate tax exposure and ownership restructuring, exacerbated by years of inaction due to “paralysis by analysis.”
The family needed a plan to:
Restructure ownership to facilitate generational transfer.
Address estate tax concerns.
Avoid jeopardizing business cash flow or growth.
Maintain the current generation’s lifestyle during the transition.
Interchange developed a tailored solution by leveraging the company’s strong cash-flow profile and aligning it with the family’s long-term goals. Key steps included:
Assessing Cash Flow
Analyzed the company’s negative working capital requirement, which allowed it to generate profits without needing cash reserves.
Identified opportunities to sweep excess funds into trusts for future transfers without affecting business operations.
Modeling Financial Scenarios
Created a cash-flow model integrating the family’s Spend, Live, GiveTM (SLG™) strategy to match business-generated funds with personal financial needs.
Demonstrated how the business could support shareholder buyouts and trust funding while preserving cash flow for growth.
Implementing Ownership Transition
Worked with the family to structure ownership transfers to trusts, minimizing estate tax exposure.
Designed the framework to provide access to future cash flow for the next generation while maintaining the current generation’s financial stability.
The family successfully transitioned ownership to the next generation without disrupting business operations or requiring external liquidity sources. This approach reduced estate tax exposure while preserving cash flow to support both business growth and the family’s financial needs.
For personalized guidance on your family business liquidity needs, 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.
