Online article - Generational Equity

Strength in numbers

Family business owners who have assumed leadership roles in their trade associations admit that the workload can be heavy—but they say the payoff is well worth it.
Lenders look favorably on outside experience.
Next-generation members who have previously earned significant experience outside the family business have a fresh perspective and a more neutral approach when it comes to strategizing for the future once the transition is complete.
Lenders find well-rounded, experienced second-generation leadership very appealing.(18 April 2009 - Blog article Business Exit Planning )
A lender considering financing a family-owned business will want to see more than just the plan for the changing of the guard.

The microscope will also shift to the next generation and whether or not they have been properly groomed to maintain and grow the business.

The bank will ask the hard transitional questions when making a loan decision.
On top of that list is whether the second generation is capable.
Just because a member of the team is related does not mean he or she is the best choice to move into the position of chief executive officer. Perhaps the daughter or son would better serve the company in a technology or human resources role.
Most financial institutions have a “sweet spot” for lending.
Owners must consider the amount of credit they are seeking before they approach a bank for a loan.
Just like the old fairy tale of Goldilocks and the three bears, the amount should be “just right” for the bank, not too high or too low.
A relationship that is the right fit can grow as the business grows.
In today’s economy, obtaining financing involves more than just planning internally to make a presentation that appeals to a bank.
With so many financial institutions in crisis, it is very important for business owners to protect themselves through due diligence research to ensure they are partnering with a stable bank that fits.
Despite the barrage of recession-related doom-and-gloom stories, financing is still available for family-owned businesses.
Many healthy banks are hungry to lend to the right clients.
Even in these trying times, business owners who do their homework can find a stable lender that understands their industry.Generational Equity

Don’t be afraid to go straight to the top.
Potential borrowers should always meet with the bank’s senior management.
Sitting down with the CEO or chief credit officer is important to ensure everyone is philosophically aligned.
If bank executives sense that the key players are not on the same page about the future of the company, the bank will reconsider its decision to make a loan.
Dissent forecasts roadblocks to future success—and it also shows the family’s lack of preparation.

One common subject of dissent is the requirement of significant owners to personally guarantee bank loans.
Banks typically require any principal of a non-public company with an ownership stake of 20% or more to guarantee the loan.

To the banker, the guarantee provides a secondary source of repayment, as well as a show of good faith that the principals believe in their company and are willing to support it. Owners who do not share the same level of conviction for their company raise a serious red flag for the banker. (12 July 2007 professional evaluation )

The Private Business Owner article

Regardless of the size of the business, lenders need to know that a solid plan exists for the founder to step back and accept a diminished role in order to move the company forward.

Years of hard work, sacrifice and deep personal involvement can make it extremely difficult for a founder to hand over authority and responsibility to the next generation.

If the senior leader is only willing to pass on responsibility, but not authority, a divide can be created between the generations that can jeopardize the future of the company. Lenders who sense such a divide will not view the company as a viable loan candidate.
Leaders of family firms should be aware, though, that prospective lenders know the family dynamic can pre-sent a unique set of challenges.
When making a decision about financing, lenders will do more than just review the company’s past achievements.
They will also look for evidence that a solid succession plan is in place, and that the family is on board with the company’s strategic plan.( 03 May 2008 Online article Generational Equity )


More similar articles you may find interesting:
The Private Business Owner, Business Exit Planning, Generational Equity

Press article Generational Equity

Leaders of family firms should be aware, though, that prospective lenders know the family dynamic can pre-sent a unique set of challenges.
When making a decision about financing, lenders will do more than just review the company’s past achievements.
They will also look for evidence that a solid succession plan is in place, and that the family is on board with the company’s strategic plan.
If bank executives sense that the key players are not on the same page about the future of the company, the bank will reconsider its decision to make a loan.
Dissent forecasts roadblocks to future success—and it also shows the family’s lack of preparation.

One common subject of dissent is the requirement of significant owners to personally guarantee bank loans.
Banks typically require any principal of a non-public company with an ownership stake of 20% or more to guarantee the loan.

To the banker, the guarantee provides a secondary source of repayment, as well as a show of good faith that the principals believe in their company and are willing to support it. Owners who do not share the same level of conviction for their company raise a serious red flag for the banker.(11 October 2007 - Blog article Generational Equity )
Despite the barrage of recession-related doom-and-gloom stories, financing is still available for family-owned businesses.
Many healthy banks are hungry to lend to the right clients.
Even in these trying times, business owners who do their homework can find a stable lender that understands their industry.
Put it in writing

Before going to meet with a prospective lender, there are two important steps a family business owner should take.
First, meet with key family members.
They must be in full agreement on the company’s vision and strategy.

Once all key family members are in agreement, put that plan into writing in an executive summary. Putting the business plan on paper helps organize the owners’ thoughts and shows a preparedness that is looked upon favorably by banks.
Don’t be afraid to go straight to the top.
Potential borrowers should always meet with the bank’s senior management.
Sitting down with the CEO or chief credit officer is important to ensure everyone is philosophically aligned.
Most financial institutions have a “sweet spot” for lending.
Owners must consider the amount of credit they are seeking before they approach a bank for a loan.
Just like the old fairy tale of Goldilocks and the three bears, the amount should be “just right” for the bank, not too high or too low.
A relationship that is the right fit can grow as the business grows.Generational Equity

Never underestimate the power of a good reference.
Conduct some independent research out in the community.
If you ask for references, banks will provide them.
However, just as one would never provide a bad reference on a résumé, the bank will always offer references that provide glowing reviews.

Check in with an outside accountant, attorney, insurance broker or other trusted adviser to see if they can provide a few independent references. Be certain to follow up to get a clear picture of the bank’s track record and client relationships and the contact’s view of the current management.
Show your stability

Business owners should be aware that lenders will scrutinize the dynamic between the founder and the second-generation members.
Before providing financing, lenders will want to see how the senior generation has planned and prepared for the transition.
Banks want to know to what extent the founder will remain involved, if at all, once the roles have been turned over.
The nuance of that dynamic is a very important factor. (18 May 2009 The Private Business Owner )

Generational Equity article

Strength in numbers

Family business owners who have assumed leadership roles in their trade associations admit that the workload can be heavy—but they say the payoff is well worth it.
Lenders look favorably on outside experience.
Next-generation members who have previously earned significant experience outside the family business have a fresh perspective and a more neutral approach when it comes to strategizing for the future once the transition is complete.
Lenders find well-rounded, experienced second-generation leadership very appealing.( 21 November 2007 Press article Generational Equity )


More similar results you may find interesting:
Business Exit Planning, The Private Business Owner, professional evaluation

Generational Equity article

Don’t be afraid to go straight to the top.
Potential borrowers should always meet with the bank’s senior management.
Sitting down with the CEO or chief credit officer is important to ensure everyone is philosophically aligned.
A lender considering financing a family-owned business will want to see more than just the plan for the changing of the guard.

The microscope will also shift to the next generation and whether or not they have been properly groomed to maintain and grow the business.

The bank will ask the hard transitional questions when making a loan decision.
On top of that list is whether the second generation is capable.
Just because a member of the team is related does not mean he or she is the best choice to move into the position of chief executive officer. Perhaps the daughter or son would better serve the company in a technology or human resources role.(11 June 2007 - Blog article Business Exit Planning )
Put it in writing

Before going to meet with a prospective lender, there are two important steps a family business owner should take.
First, meet with key family members.
They must be in full agreement on the company’s vision and strategy.

Once all key family members are in agreement, put that plan into writing in an executive summary. Putting the business plan on paper helps organize the owners’ thoughts and shows a preparedness that is looked upon favorably by banks.
A written summary offers the opportunity to provide lenders with a brief narrative about each family member, what his or her background is and what role he or she fills in the company.

It is also an opportunity to address the question of transition between the generations, describing the plan and demonstrating the company is prepared for its future.

The summary should not just state the company history. It is important to put some numbers behind the plan.

Lenders focus heavily on current and historic financials, but it is also key to include hard numbers that show the company’s goals moving forward. Lenders want to see the company’s projection for the future and hear the assumptions behind those projections.
Bank executives will ask tough questions to determine whether those projections and assumptions are realistic, so owners should be prepared to defend goals by answering “how” and “why.”
In today’s economy, obtaining financing involves more than just planning internally to make a presentation that appeals to a bank.
With so many financial institutions in crisis, it is very important for business owners to protect themselves through due diligence research to ensure they are partnering with a stable bank that fits.
Regardless of the size of the business, lenders need to know that a solid plan exists for the founder to step back and accept a diminished role in order to move the company forward.

Years of hard work, sacrifice and deep personal involvement can make it extremely difficult for a founder to hand over authority and responsibility to the next generation.

If the senior leader is only willing to pass on responsibility, but not authority, a divide can be created between the generations that can jeopardize the future of the company. Lenders who sense such a divide will not view the company as a viable loan candidate.Professional Evaluation

During these tumultuous economic times, borrowers should put in the legwork to ensure they are partnering with an institution that is not in jeopardy of going under.
There are many resources available to help you determine a bank’s stability.
Show your stability

Business owners should be aware that lenders will scrutinize the dynamic between the founder and the second-generation members.
Before providing financing, lenders will want to see how the senior generation has planned and prepared for the transition.
Banks want to know to what extent the founder will remain involved, if at all, once the roles have been turned over.
The nuance of that dynamic is a very important factor. (25 July 2009 Business Exit Planning )

Generational Equity article

Show your stability

Loan officers will look closely at the history of a family-owned business, reviewing the roles of each family member within the company and how harmonious those relationships have been through the years.

A history of discontent or strife among family employees will cause lenders to question whether the company is a sound investment.

This is particularly true when it comes to the issue of transition between the first and second generations.
Despite the barrage of recession-related doom-and-gloom stories, financing is still available for family-owned businesses.
Many healthy banks are hungry to lend to the right clients.
Even in these trying times, business owners who do their homework can find a stable lender that understands their industry.( 20 March 2008 Online press Generational Equity )


More realated articles you may find interesting:
The Private Business Owner, Generational Equity, Business Exit Planning

Online press - Business Exit Planning

During these tumultuous economic times, borrowers should put in the legwork to ensure they are partnering with an institution that is not in jeopardy of going under.
There are many resources available to help you determine a bank’s stability.
Regardless of the size of the business, lenders need to know that a solid plan exists for the founder to step back and accept a diminished role in order to move the company forward.

Years of hard work, sacrifice and deep personal involvement can make it extremely difficult for a founder to hand over authority and responsibility to the next generation.

If the senior leader is only willing to pass on responsibility, but not authority, a divide can be created between the generations that can jeopardize the future of the company. Lenders who sense such a divide will not view the company as a viable loan candidate.(10 April 2009 - Press article The Private Business Owner )
Lenders look favorably on outside experience.
Next-generation members who have previously earned significant experience outside the family business have a fresh perspective and a more neutral approach when it comes to strategizing for the future once the transition is complete.
Lenders find well-rounded, experienced second-generation leadership very appealing.
Does your family business have what lenders are looking for?

1. Does your company have a sustainable competitive advantage?

2. Does your company have a talented management team?

3. Are the family dynamics harmonious?

4. Does your company have a dependable cash flow?

5. Does your company have a solid underlying net worth, and are the primary owners willing to support the company’s credit request with a personal guarantee?
A written summary offers the opportunity to provide lenders with a brief narrative about each family member, what his or her background is and what role he or she fills in the company.

It is also an opportunity to address the question of transition between the generations, describing the plan and demonstrating the company is prepared for its future.

The summary should not just state the company history. It is important to put some numbers behind the plan.

Lenders focus heavily on current and historic financials, but it is also key to include hard numbers that show the company’s goals moving forward. Lenders want to see the company’s projection for the future and hear the assumptions behind those projections.
Bank executives will ask tough questions to determine whether those projections and assumptions are realistic, so owners should be prepared to defend goals by answering “how” and “why.”
Put it in writing

Before going to meet with a prospective lender, there are two important steps a family business owner should take.
First, meet with key family members.
They must be in full agreement on the company’s vision and strategy.

Once all key family members are in agreement, put that plan into writing in an executive summary. Putting the business plan on paper helps organize the owners’ thoughts and shows a preparedness that is looked upon favorably by banks.Business Exit Planning

Don’t be afraid to go straight to the top.
Potential borrowers should always meet with the bank’s senior management.
Sitting down with the CEO or chief credit officer is important to ensure everyone is philosophically aligned.
A lender considering financing a family-owned business will want to see more than just the plan for the changing of the guard.

The microscope will also shift to the next generation and whether or not they have been properly groomed to maintain and grow the business.

The bank will ask the hard transitional questions when making a loan decision.
On top of that list is whether the second generation is capable.
Just because a member of the team is related does not mean he or she is the best choice to move into the position of chief executive officer. Perhaps the daughter or son would better serve the company in a technology or human resources role. (01 April 2009 Business Exit Planning )

Business Valuation article

Despite the barrage of recession-related doom-and-gloom stories, financing is still available for family-owned businesses.
Many healthy banks are hungry to lend to the right clients.
Even in these trying times, business owners who do their homework can find a stable lender that understands their industry.
Looking back, looking ahead
The past 15 years have been marked by incredible economic, political and technological changes. What lessons can family business owners learn from this fascinating period in history?( 08 July 2008 Online press Business Exit Planning )


Similar articles you may find fascinating:
The Private Business Owner, Generational Equity, professional evaluation

Generational Equity article

Show your stability

Business owners should be aware that lenders will scrutinize the dynamic between the founder and the second-generation members.
Before providing financing, lenders will want to see how the senior generation has planned and prepared for the transition.
Banks want to know to what extent the founder will remain involved, if at all, once the roles have been turned over.
The nuance of that dynamic is a very important factor.
Looking back, looking ahead
The past 15 years have been marked by incredible economic, political and technological changes. What lessons can family business owners learn from this fascinating period in history?(26 February 2008 - Online article The Private Business Owner )
Lenders look favorably on outside experience.
Next-generation members who have previously earned significant experience outside the family business have a fresh perspective and a more neutral approach when it comes to strategizing for the future once the transition is complete.
Lenders find well-rounded, experienced second-generation leadership very appealing.
Despite the barrage of recession-related doom-and-gloom stories, financing is still available for family-owned businesses.
Many healthy banks are hungry to lend to the right clients.
Even in these trying times, business owners who do their homework can find a stable lender that understands their industry.
Research the bank:
You wouldn’t go to a podiatrist if you had a sinus infection, and it’s just as wrong to seek financing from a bank that does not know the industry your business is in.
Research the bank to see if it has a history of lending to other companies in your industry, and to determine whether it understands family business in general.
Show your stability

Loan officers will look closely at the history of a family-owned business, reviewing the roles of each family member within the company and how harmonious those relationships have been through the years.

A history of discontent or strife among family employees will cause lenders to question whether the company is a sound investment.

This is particularly true when it comes to the issue of transition between the first and second generations.Business Exit Planning

Leaders of family firms should be aware, though, that prospective lenders know the family dynamic can pre-sent a unique set of challenges.
When making a decision about financing, lenders will do more than just review the company’s past achievements.
They will also look for evidence that a solid succession plan is in place, and that the family is on board with the company’s strategic plan.
An excellent example of a family business with a successful banking relationship is BC Rentals of Southern California, whose owners have been banking with Sunwest Bank for 13 years.
The partnership began in 1996 with Robert and Sally Carson’s first company, Breezer Construction Services.
Since then, Sunwest Bank has assisted the Carsons with financing for equipment, a commercial building and a working capital line of credit.

Breezer Construction was eventually sold and BC Rentals was formed for the purpose of renting arrow boards for use in directing traffic, along with message boards, cones, compressors and other equipment used in conjunction with highway safety and construction.

The Carsons and BC Rentals have maintained a strong relationship with Sunwest Bank, using debt to finance capital purchases when appropriate. Robert and Sally Carson operate the business as a team; Robert handles day-to-day business operations while Sally manages the office and administrative matters. (30 December 2006 Generational Equity )

Business Exit Planning article

A lender considering financing a family-owned business will want to see more than just the plan for the changing of the guard.

The microscope will also shift to the next generation and whether or not they have been properly groomed to maintain and grow the business.

The bank will ask the hard transitional questions when making a loan decision.
On top of that list is whether the second generation is capable.
Just because a member of the team is related does not mean he or she is the best choice to move into the position of chief executive officer. Perhaps the daughter or son would better serve the company in a technology or human resources role.
Most financial institutions have a “sweet spot” for lending.
Owners must consider the amount of credit they are seeking before they approach a bank for a loan.
Just like the old fairy tale of Goldilocks and the three bears, the amount should be “just right” for the bank, not too high or too low.
A relationship that is the right fit can grow as the business grows.( 24 June 2007 Press article Generational Equity )


Other similar results you may find interesting:
Business Exit Planning, The Private Business Owner, Business Exit Planning

Blog article Business Exit Planning

Looking back, looking ahead
The past 15 years have been marked by incredible economic, political and technological changes. What lessons can family business owners learn from this fascinating period in history?
Show your stability

Business owners should be aware that lenders will scrutinize the dynamic between the founder and the second-generation members.
Before providing financing, lenders will want to see how the senior generation has planned and prepared for the transition.
Banks want to know to what extent the founder will remain involved, if at all, once the roles have been turned over.
The nuance of that dynamic is a very important factor.(24 November 2009 - Online press article The Private Business Owner )
Leaders of family firms should be aware, though, that prospective lenders know the family dynamic can pre-sent a unique set of challenges.
When making a decision about financing, lenders will do more than just review the company’s past achievements.
They will also look for evidence that a solid succession plan is in place, and that the family is on board with the company’s strategic plan.
Despite the barrage of recession-related doom-and-gloom stories, financing is still available for family-owned businesses.
Many healthy banks are hungry to lend to the right clients.
Even in these trying times, business owners who do their homework can find a stable lender that understands their industry.
Strength in numbers

Family business owners who have assumed leadership roles in their trade associations admit that the workload can be heavy—but they say the payoff is well worth it.
A lender considering financing a family-owned business will want to see more than just the plan for the changing of the guard.

The microscope will also shift to the next generation and whether or not they have been properly groomed to maintain and grow the business.

The bank will ask the hard transitional questions when making a loan decision.
On top of that list is whether the second generation is capable.
Just because a member of the team is related does not mean he or she is the best choice to move into the position of chief executive officer. Perhaps the daughter or son would better serve the company in a technology or human resources role.Business Exit Planning

Don’t be afraid to go straight to the top.
Potential borrowers should always meet with the bank’s senior management.
Sitting down with the CEO or chief credit officer is important to ensure everyone is philosophically aligned.
Does your family business have what lenders are looking for?

1. Does your company have a sustainable competitive advantage?

2. Does your company have a talented management team?

3. Are the family dynamics harmonious?

4. Does your company have a dependable cash flow?

5. Does your company have a solid underlying net worth, and are the primary owners willing to support the company’s credit request with a personal guarantee? (22 October 2007 Business Exit Planning )

Generational Equity article

During these tumultuous economic times, borrowers should put in the legwork to ensure they are partnering with an institution that is not in jeopardy of going under.
There are many resources available to help you determine a bank’s stability.
Never underestimate the power of a good reference.
Conduct some independent research out in the community.
If you ask for references, banks will provide them.
However, just as one would never provide a bad reference on a résumé, the bank will always offer references that provide glowing reviews.

Check in with an outside accountant, attorney, insurance broker or other trusted adviser to see if they can provide a few independent references. Be certain to follow up to get a clear picture of the bank’s track record and client relationships and the contact’s view of the current management.( 21 January 2008 Blog article Business Exit Planning )


Similar results you may find fascinating:
The Private Business Owner, Business Exit Planning, The Private Business Owner

Business Exit Planning blog article

Business Exit Planning

A written summary offers the opportunity to provide lenders with a brief narrative about each family member, what his or her background is and what role he or she fills in the company.

It is also an opportunity to address the question of transition between the generations, describing the plan and demonstrating the company is prepared for its future.

The summary should not just state the company history. It is important to put some numbers behind the plan.

Lenders focus heavily on current and historic financials, but it is also key to include hard numbers that show the company’s goals moving forward. Lenders want to see the company’s projection for the future and hear the assumptions behind those projections.
Bank executives will ask tough questions to determine whether those projections and assumptions are realistic, so owners should be prepared to defend goals by answering “how” and “why.” Generational Equity
Put it in writing

Before going to meet with a prospective lender, there are two important steps a family business owner should take.
First, meet with key family members.
They must be in full agreement on the company’s vision and strategy.

Once all key family members are in agreement, put that plan into writing in an executive summary. Putting the business plan on paper helps organize the owners’ thoughts and shows a preparedness that is looked upon favorably by banks.
Show your stability

Loan officers will look closely at the history of a family-owned business, reviewing the roles of each family member within the company and how harmonious those relationships have been through the years.

A history of discontent or strife among family employees will cause lenders to question whether the company is a sound investment.

This is particularly true when it comes to the issue of transition between the first and second generations.
Regardless of the size of the business, lenders need to know that a solid plan exists for the founder to step back and accept a diminished role in order to move the company forward.

Years of hard work, sacrifice and deep personal involvement can make it extremely difficult for a founder to hand over authority and responsibility to the next generation.

If the senior leader is only willing to pass on responsibility, but not authority, a divide can be created between the generations that can jeopardize the future of the company. Lenders who sense such a divide will not view the company as a viable loan candidate.
The Private Business Owner: Does your family business have what lenders are looking for?

1. Does your company have a sustainable competitive advantage?

2. Does your company have a talented management team?

3. Are the family dynamics harmonious?

4. Does your company have a dependable cash flow?

5. Does your company have a solid underlying net worth, and are the primary owners willing to support the company’s credit request with a personal guarantee?
Don’t be afraid to go straight to the top.
Potential borrowers should always meet with the bank’s senior management.
Sitting down with the CEO or chief credit officer is important to ensure everyone is philosophically aligned.

Business Exit Planning

Despite the barrage of recession-related doom-and-gloom stories, financing is still available for family-owned businesses.
Many healthy banks are hungry to lend to the right clients.
Even in these trying times, business owners who do their homework can find a stable lender that understands their industry.
Show your stability

Business owners should be aware that lenders will scrutinize the dynamic between the founder and the second-generation members.
Before providing financing, lenders will want to see how the senior generation has planned and prepared for the transition.
Banks want to know to what extent the founder will remain involved, if at all, once the roles have been turned over.
The nuance of that dynamic is a very important factor. Generational Equity, The Private Business Owner, Professional Evaluation
A lender considering financing a family-owned business will want to see more than just the plan for the changing of the guard.

The microscope will also shift to the next generation and whether or not they have been properly groomed to maintain and grow the business.

The bank will ask the hard transitional questions when making a loan decision.
On top of that list is whether the second generation is capable.
Just because a member of the team is related does not mean he or she is the best choice to move into the position of chief executive officer. Perhaps the daughter or son would better serve the company in a technology or human resources role.
Business Exit Planning Never underestimate the power of a good reference.
Conduct some independent research out in the community.
If you ask for references, banks will provide them.
However, just as one would never provide a bad reference on a résumé, the bank will always offer references that provide glowing reviews.

Check in with an outside accountant, attorney, insurance broker or other trusted adviser to see if they can provide a few independent references. Be certain to follow up to get a clear picture of the bank’s track record and client relationships and the contact’s view of the current management.


More realated results:

The Private Business Owner ~ Business Exit Planning ~ Professional Evaluation