Shareholder Liquidity

Periodically shareholders in privately owned companies need some liquidity. Most often such liquidity does not require the sale of the business.

However, as growing companies require capital, in most situations tension can develop between the capital requirements of a growing company and the liquidity needs of its shareholders.

Family Enterprise Business Services

Larger private companies typically adopt liquidity plans for shareholders. As companies grow and their capitalization changes, the liquidity plan formulas also need to be adjusted. Liquidity plans can be internally funded from the balance sheet or from free cash flow of a business, or from external debt or equity capital.

HWSC can assist with the analysis and design of shareholder liquidity plans and, to the extent external funding is required, we can also arrange funding for shareholder liquidity in both the debt or equity capital markets. If external funding is needed, we have researched many funding sources that are supportive of private family - controlled businesses. These include family offices, multi-family offices, private individual investors or foundations, and certain institutional investors.

We also understand the value of nurturing the current owners' long-term patient capital. Often shareholder relationship building and communication programs are needed to maintain an enthusiastic and positive view among shareholders of the long-term value of holding shares in a private company. The more that shareholders remain interested in long-term ownership, the lower the current pressure will be on a company's balance sheet, and credit or cash flow, from shareholder liquidity demands.

From time-to-time, shareholders decide to sell a business to generate complete liquidity. We can assist with those transactions as well, and have demonstrated in the past an ability to optimize results at those times. This is due to four factors: (i) our long-term involvement with, and intimate understanding of, our clients' companies, (ii) our experienced senior team members in our investment banking affiliate, who have helped clients successfully execute many exit transactions, (iii) our thorough understanding of the industry sectors in which our clients' companies operate, and (iv) our proven ability to reach both strategic and financial buyers globally through our investment banking affiliates membership in Mergers Alliance.

Shareholder Liquidity Support

SERVICE CATEGORY

DESCRIPTION

Business/ Ownership Interest Valuation Estimates

Understanding how the business or ownership interests in the business might be valued.

Design & Implement Liquidity Plans

Assisting clients to understand various types of shareholder liquidity alternatives and to design and implement liquidity plans.

Internal Liquidity Solutions

Internal liquidity solutions are structured based upon a company’s current earnings balance sheet financial resources, or to be supported within its existing shareholder base. Each of these solutions can be used on a stand-alone basis or in conjunction with other internal or external liquidity solutions.

External Liquidity Solutions
(Excluding Sale of Business)

External liquidity solutions are structured to use funding provided by third parties. Each of these solutions can be used on a stand-alone basis or in conjunction with other internal or external liquidity solutions.

Monetization Planning & Execution
(Sale of Business)

Business Monetization Planning is a body of knowledge, which began developing in the US towards the end of the 20th century, and is now spreading globally. A Business Monetization exercise begins with the shareholder(s) of a company defining their objectives with respect to an eventual monetization of their ownership interest in a business.

Questions our clients frequently ask

Our clients are often seeking input on the following liquidity issues:

  • What is the value of our business?
  • How do we address the liquidity needs of some of our shareholders?
  • Should we sell our business?
  • How do we buyout a branch of the family?
  • Can the liquidity needs of older shareholders be funded efficiently?
  • What do we need to do before trying to sell our business?
  • Should we pay dividends?
  • Can the value of our business be increased before we sell? (See Business Growth Services)

 

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Business Growth Shareholder Liquiedity Company Capitalization Generational Transition