While the family business may be delivering good returns, how much is it actually worth? Often, family members are disappointed that the market value does not reflect a large enough multiple, because they are unable to look at the business as an outsider (and potential buyer) would.
The first article has some classic ‘value drivers’ expressed in terms of growth and risk reduction. What I think this is missing from this model is the most important question a family business should ask: what is the business worth with family members vs what it is worth without them? If your business is overly dependent on family talent, then it lacks intrinsic value that can be realised in the market.
On that note, the second article discusses the process of bringing in outsiders into the family business. Whether in management or on the board (or advisory board), outsiders can add significant value because of their perspective, and also their ability to mediate conflict and help ensure all family members voices are heard. In order to be effective, the family must be prepared to listen and learn.
Consider This: Have you considered the value of your family business without family members? Are the business accounts run at arms length so they can reflect the true value of the business? Are external advisers viewed with disdain or for the value their experience and diversity can bring?
Original articles: https://www.bakertilly.com/insights/thinking-about-selling-how-to-grow-the-value-of-a-family-owned-business/, https://www.forbes.com/sites/nextavenue/2019/01/29/hiring-an-outside-expert-for-your-family-business/#7b2749bc61ed
As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at https://davidwerdiger.com
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