Family Enterprise Business Services
EY Family Enterprise Business Services support enterprising families in their quest to grow larger, more valuable businesses that will last. Leveraging our proprietary methodologies and using our holistic approach to protect, grow and improve your family enterprise, we can work with you to develop and implement a plan for growth, capital strategy, generational transition and shareholder liquidity.
What EY can do for you
As a family business owner, you naturally want to take your company to the next level. But your path to growth and challenges are unique and more complicated due to accelerating change and competition. External investors don’t drive your decisions, but a broadening base of family owners and your collective needs, cultures and values do.
The operating business typically generates most of the family’s wealth and income. That means you have even more at stake. You want your business to survive and prosper, professionalize performance and maintain your ideals. Your employees, local economy and community depend on your success, and so does your family.
You need professionals who understand these distinct pressures, as well as the macroeconomic and industry forces that could disrupt your business or plans for the future. EY Family Enterprise Business Services are designed to support enterprising multigenerational families grow larger, more valuable businesses that will last for generations to come.
An integrated approach
EY Family Enterprise Business Services comprise a team of family business advisors who are passionate about the important purpose, role and value that business-owning families bring to our economy and society. We understand that cultivating larger, more valuable businesses while preparing the next generation for ownership is challenging. And balancing the capital needs of a growing business with the periodic liquidity needs of your shareholders must also be considered. Paramount, however, is the need for fostering stewardship to create an enduring, long-term legacy.
We support business-owning families to tackle these questions and more:
- Is our business growth strategy keeping pace with customer demands and competitive forces?
- Do we have sufficient capital to fund current operations and propel future growth?
- How do we engage the next generation and prepare them to take ownership?
- Have we evaluated the advantages, risks and costs of our shareholder liquidity plan?
Our multidisciplinary team can advise you in creating and executing the strategies necessary to prosper as an enterprising family. It starts with an integrated approach across four key competencies: business growth, company capitalization, generational transition and shareholder liquidity.
In today’s dynamic and disruptive business environment, developing and implementing successful business growth strategies can require a robust strategic perspective that anticipates market trends, customer needs and competitor actions, and/or growth strategy implementation assistance. We can tailor support, as needed, among four categories of growth resources:
- Research and data tools support
- Performance assessment and planning assistance
- Execution support
- Continuous growth services
Our suite of business growth resources can support you in developing, executing and monitoring the success of internal and external business growth strategies. Have you considered the following?
- Are the strategic alternatives we’re pursuing adequate to enhance business-value growth?
- What key performance indicators have we established to benchmark progress?
- Is stagnant growth threatening our competitive position or future cash flow?
- What internal improvements would drive growth?
- Are our growth strategies based on sufficient facts and data from the marketplace?
- Are we prepared for management succession?
Clients with multiple businesses will have multiple plans and implementation requirements. We can support varying growth initiatives across a group of portfolio or subsidiary companies.
Obtaining the appropriate capital funding to fuel your growth strategy can be a challenge, particularly if you want to keep the business in the family. And it’s not just about growth. Your operating requirements and shareholder liquidity needs will play a major role in any decisions. Have you asked the following?
- What are our funding priorities?
- Do we have sufficient capital to meet our operating requirements and shareholder liquidity needs?
- Does our capital budgeting or financial planning and analysis need to be improved?
- Are our capital providers aligned?
- Can we improve the credit quality of our business?
We offer preliminary guidance so you can understand and evaluate the range of business capitalization and structural alternatives that align with your objectives and priorities.
Most middle-market business owners say they want to transfer their companies to the next generation, but few succeed. That’s because transferring leadership from one generation to the next is a complex management challenge, and many companies are slow to act. Have you asked the following?
- How can we best implement a phased generational transition process for our business holdings?
- Does our family have a vision statement that addresses all aspects of our plans for the future of our family enterprise?
- Are those who will inherit business ownership adequately prepared to be responsible owners and partners with other family members?
- Will our ownership and business governance systems support a successful generational transition?
- Are family shareholders seeking best practices to help preserve wealth for future generations?
- Is there uncertainty around who will be next in line?
We think of the transition of a business from one generation to the next as generational stewardship because there are broader economic consequences. We focus on helping you protect the business in the process and manage key disrupters, ranging from shareholder conflicts to unprepared heirs. And we work with you to improve your organizational and governance systems and processes to align current owners and engage the next generation.
Current demographics: 75% of middle-market companies face "once in a generation" planning decisions between 2018 and 2028.
Source: EY Family Enterprise Business Services (FEBS)
Comprehending and meeting the liquidity needs of the business and the family is a balancing act that’s necessary to continue growing the enterprise.
Family shareholders periodically need liquidity. While that often does not require the sale of the business, it can still create tension when shareholder needs and capital requirements for a growing business conflict. Have you considered the following?
- How do we encourage family members to recognize the long-term value of holding shares in a private company?
- Is our business adequately financed relative to future liquidity demands from shareholders or their estates?
- Should we have a formal dividend policy or liquidity plan for shareholders?
- Does our current shareholders' agreement adequately address the liquidity needs of shareholders?
- Are family members wondering if it’s time to sell the business?
You have options. We can work with you to assess and design internal and external alternatives to provide liquidity mechanisms in the context of your objectives and priorities. We employ a range of customized tools and methodologies to evaluate the requirements, risks and costs of each option.
No matter where you are on your journey, our multidisciplinary team can support you on executing the strategies successful multigenerational families need to bypass disruption, achieve long-term growth and have successful generational transitions.