SERVICES
Liquidity Solutions &
Family Business Succession Planning
Smooth Transitions and Tailored
Liquidity Solutions for Family Businesses
Maintaining healthy cash flow is crucial for family-owned businesses, but freeing up cash can be challenging. Interchange Capital Partners creates custom liquidity solutions to support business growth while guiding family businesses through leadership transitions. We align differing visions, prepare new leaders, and craft optimal exit strategies by understanding shareholders' unique needs and assessing the business's value and growth potential. To explore transition planning in greater detail, download our Succession Planning eGuide, a resource to support informed decisions at every stage.
The questions that keep family business owners awake at night often have answers hiding in plain sight. We specialize in finding the "third way" – solutions that don't force you to choose between family legacy and financial flexibility.
The questions that keep family business owners awake at night often have answers hiding in plain sight. We specialize in finding the "third way" – solutions that don't force you to choose between family legacy and financial flexibility.
KEY MISTAKES
OWNERS MAKE -
SOLUTION -
T
Lack of Liquidity Options
Without the ability to access cash, your business may face significant challenges during a transition, as limited liquidity options restrict your flexibility in addressing financial needs.
Liquidity Options
At Interchange, we work to develop strategies that provide access to cash, including but not limited to leveraging financial instruments, restructuring debt, or exploring sale-leaseback opportunities. We help our clients generate real solutions when liquidity is needed, whether it’s to manage cash flow challenges or facilitate shareholder buyouts.
Differing Owner Visions
Differing visions and goals among owners can create significant challenges in succession planning, leading to tension, unrealistic liquidity demands, and personal conflicts that spill over into the business, affecting both productivity and family harmony.
Aligned Owner Visions
Interchange facilitates vision alignment sessions with all stakeholders to create a unified succession plan that addresses shared goals, including realistic liquidity demands. We also help implement a conflict-resolution process (incorporating third-party mediation and constructive dialogue) to move beyond short-term fixes and nurture long-term collaboration and understanding among family members.
Leadership Transition
Mishandling leadership transitions can disrupt the business and create fractures within the ownership group if not addressed early in the process.
Leadership Transition Planning
We help design a detailed leadership transition plan from the outset, conducting comprehensive skills and assessments to match family members to roles that suit their strengths. This approach, combined with mentorship and training, aims to minimize disruptions and foster a smooth leadership transition.
Family Liquidity and Distribution Demands
Family-owned and closely held businesses often overlook the need for a clear understanding of how liquidity is generated, both now and in the future. Without a strategy in place, family members may face confusion around cash distributions, dividend recaps, potential buyouts, and the division of responsibilities.
Balanced Family Liquidity
We strive to develop a family liquidity policy that aligns with business growth, creating clear guidelines for distributions that help maintain financial stability while supporting family needs and business objectives.
Inadequate Entity and Ownership Structures
Failing to thoroughly evaluate current entity and ownership structures can lead to inflexibility, higher taxes, and unnecessary costs during ownership transitions.
Optimal Entity and Ownership Structures
We review and update entity and ownership structures to enhance flexibility and tax efficiency. By collaborating with legal and financial experts, we help minimize costs and improve the overall structure to support smoother transitions.
Strained Resources from High Dividend Payouts
When excessive dividend payments deplete resources without replenishing cash flow, your business may struggle to stay competitive, potentially losing ground with increasing family members involved in the business.
Balancing Dividends and Growth
Interchange seeks to implement policies that balance dividend payouts with the business’s cash flow needs, retaining enough capital to sustain operations and foster growth, all while preserving the company’s competitive position and family harmony.
Underutilized Resources and Balance Sheets
Failing to leverage the resources and balance sheets of individual owners can limit the creation of bespoke ownership transition structures, potentially missing out on valuable opportunities.
Leveraging Owner Resources
Interchange works with individual owners’ resources and balance sheets to develop custom ownership transition structures (including exploring co-investments and pooled resources) to enhance flexibility and optimize the transition process.
Valuation Discounts
Failing to utilize valuation discounts at the right stages of the process can result in higher transition costs, negatively impacting overall financial efficiency.
Valuation Timing
Interchange schedules regular business valuations and strategically applies valuation discounts to reduce costs, helping to optimize financial outcomes and maintain accurate assessments throughout the ownership transition.
Fragmented Advice
Beginning discussions with accountants and attorneys without first aligning family and business goals can lead to fragmented advice, making it difficult to create a cohesive transition plan that reflects the priorities of all stakeholders.
Start With Alignment
Interchange facilitates family meetings to clarify and align goals before consulting accountants and attorneys. This approach helps create a cohesive transition strategy that integrates legal, tax, and financial considerations for the benefit of both the family and the business.
What Makes Interchange Different
We simplify the family business lifecycle with our Clarity Foundation™. Our initial 180 days involve:
Clarity
Getting a clear history of your family, business, and ownership history from inception to the present day
First 30 Days
Understanding
Explore strategies that get your company on track, aiming for success.
Next 60 Days
Action
Develop and begin executing the detailed action plan.
Next 90 Days
Aiming to Optimize Cash Flow and Navigate Succession with Confidence and Continuity
To learn how we can help you, set up a consulting session with one of our Business Advisors today.
The tax and legal information contained herein is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.