Liquidity Alternatives

At some point in the life of every business its owners are faced with a dilemma: “How do we transition ownership in our company in a manner that is in the best interest of our shareholders, our employees and our family members?” In the later decades of the 20th century a business owner’s options in solving this dilemma were limited: sell the company to a competitor; take the company public; or turn the company over to the next generation and hope to be repaid over time. This was distressful to owners that needed to move on to retirement, employees who do not want their jobs jeopardized by a new owner or management heirs who have to shoulder the burden of repaying prior ownership out of the company’s earnings. Immediate liquidity was not always easy to achieve without negative side effects.

Fortunately, 21st century business owners have a significantly larger number of liquidity alternatives available to them. Some of the new options are complex and require careful analysis, including after tax analysis, before their implementation. The Beringer Group has developed a process called the “Keep/Sell Analysis” that we have successfully employed to give business owners a wide array of options and alternatives for the successful transitioning of their companies to new ownership at one time or over several years. The “Keep/Sell Analysis” includes all of the factors that will impact all of the company’s different constituencies including the family issues at hand.

Our success in designing and implementing owner exit/transitioning transactions is reliant upon the facts at hand, industry specifics, investor availability and other factors. However, we have access to many private equity investors with whom we have long standing relationships and can fund the liquidity alternative that is best for our client.

Experience has taught us that an unplanned or poorly executed liquidity event can be very debilitating and costly to the many parties involved.