During the thirty plus years that our firm has been advising successful business owners and family-owned businesses, we have been asked to help resolve many family issues. Almost all of these cases eventually involve the exit or buyout of partners, family members or other investors. Our solutions usually result in the company continuing in its existing form but with a change in all or part of its ownership. Some examples of these buyout scenarios are:
- The managing partner or family member who is working full time in the business comes to realize that he or she is responsible for most of the company’s success but is forced to pay other inactive partners/family members dividends, salary or other company perquisites. The active manager/family member is seeking the proper way to own more of the company, or have more operating freedom.
- Two or more active partners in the business decide to set up a succession plan for the future management and ownership of the company. This activity may create issues that the present partners cannot resolve by themselves. The Beringer Group is typically brought into this situation to apply a business perspective, especially to assist the partners in determining the fair market value of the company and the best exit options available for the departing/retiring owner(s).
- The family patriarch leaves the family business to his three children. In this case only one of the children decides to work for the company. The two inactive siblings eventually reach the point in life where they need their equity in the family business. Because the business is closely held, there is no ready buyer and the active family member cannot afford to buy his/her siblings out. This creates an issue for the family that our firm is asked to resolve. A properly designed and executed Internal Buyout Solution can resolve this dilemma. The Beringer Group has successfully implemented these types of transactions for many of its clients.
- When the children who are active in the business want to buy the company from the owner generation, the transaction is sometimes put on hold due to the absence of funding for the buying parties. The Beringer Group has successfully designed and implemented this buyout transaction using the company’s unencumbered assets, or a third party who wishes to invest along side the buyers for a limited period, or other financial solutions.