70% of family businesses fail to transition their ownership from
one generation to the next. When owners of a family business
are ready to retire and have the option to pass it down to their
children, many factors keep them from doing so. What then?

In this WOWBIZ Inside Scoop video, Jim Zipurski of Corporate
Finance Associates discusses the psychological and financial
challenges of passing on a family business as well as how to use
outside financing and lots of counseling to make the transition a
win-win scenario.

Reasons why transition may fail:
• Communication failure
• Limited access to capitol
• Family dysfunction

Equity recapitalization can be the answer
In some situations, money isn't available for senior owners to
retire or isn't accessible for the younger generation to buy them
out. "Equity recapitalization" is a way for companies to acquire the
businesses while keeping the family involved in a meaningful way.

Acquisition challenges
Many factors can sidetrack the equity recapitalization strategy.
Buyers want certain characteristics in businesses; sometimes,
a family-owned business isn't financially ready for acquisition.
Private equity groups statistically have a higher rate of success
building and developing businesses than owners do when it
comes to handing it down to second and third generations. Not
every business owner can utilize equity recapitalization as a
catalyst for a successful transition, but when they can, it works
nicely - especially when coordinated through CFA!

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