Executing a Successful Liquidity Event: A Roadmap for Family Businesses


For Family Businesses, No Two Liquidity Events Are Alike 

Family leaders infuse their business with their own perspective, approach, and emotions. Often, that unique combination mixed with values and strategy is what makes the family business successful. But it also means every family leader will have different goals and priorities when the time comes to capitalize on their success. Each will approach the company sale, merger, or initial public offering a little differently. 

After helping countless families navigate these liquidity events and the new realities that come with them, we’ve seen what makes these major transitions successful. Experience shows that family dynamics are a critical piece of the puzzle. Family business leaders wouldn’t dream of tackling a liquidity event without the proper business planning. Yet it’s common for those same leaders to overlook family factors when anticipating the liquidity event that will dramatically reshape family dynamics for decades to come.

Preparing for a liquidity event is a little like planning a trip. A little preparation goes a long way, and figuring out your priorities ahead of time will make the journey much more manageable. Here is a roadmap for family leaders and family enterprises to use when preparing for a liquidity event. 

1. Figure Out Where You Want to Go

A map only helps if you know where you want to go. 

From the earliest days of a new venture, most business leaders have some ideas of where they want their businesses to go. Some are intent on selling. Others want to keep the business in the family. Some are driven to take the company public. For family leaders, sharing these ambitions with key family and business decision makers is critical. And it can’t happen too early. It’s a common lament we hear from clients – “I wish I’d started planning sooner.”

These big-picture conversations and planning exercises should be guided by a few key considerations:

Ensure a clear governance structure. Make sure you know who you want to include and what role they will play in the decision-making and planning process, particularly with other family members. Leveraging a formal approach to how decisions are made and vetted can help ensure everyone feels like their perspective is valued and can minimize disagreements down the road.  

Consider future generations. Family business leaders should think realistically about the role they want future generations to play in the family business. That means devoting time and resources into preparing them for that role. When they’re old enough, having conversations with second- and third-generation family members is critical. It’s also important to plan for a scenario in which, despite your best planning efforts, involving future generations in the family enterprise simply won’t work out. 

Expect the unexpected. Not all liquidity events are the result of long-planned, well-executed transitions. Sometimes business or family events force the sale or restructuring of a company. In these early stages, think about liquidity events in terms of ideal, acceptable, and unacceptable outcomes.

2. Plan Your Route

Once you know where you’re headed, you can start to figure out the best way to get there.

With a better idea of the shape you want the liquidity event to take, it’s time to start getting more specific on how to execute it. This accelerated planning typically takes place 12 to 24 months before the liquidity event itself. Too many families neglect family communication at this stage. As you prepare your business for change, prepare your family too. 

Make necessary changes to family financial structures, including tax strategies, governance, and risk. These adjustments should occur on the family side of the equation as well. Family leaders should start to define how their role in the family will shift after the liquidity event and how that will impact family leadership and if other family members are ready to shift their roles.  

3. Prepare for the Unexpected

Are we there yet?

We’ve seen it with more than one family; as the liquidity event looms, family leaders who maintained a rational perspective throughout the process succumb to their emotions and want to cancel or irrevocably alter the deal. At the same time, even the best-planned deals can fall through. Family leaders and family members expecting a cash windfall or big changes to the family hierarchy should keep that in mind. 

Liquidity events and a sudden increase in assets can have other unexpected consequences, particularly when the sale or merger receives media attention. Families planning for these events should pay close attention to emerging risks around family privacy and cybersecurity. It’s also important to consider how the liquidity event will impact traditional aspects of wealth management, including estate planning, trust structures, tax strategies, and philanthropic objectives.

4. Embark on Your the Next Journey

Oh, the places you’ll go!

Family business leaders who have executed a liquidity event know just how difficult the journey can be. Having a clear plan for enjoying whatever comes next should not be an afterthought. It’s a critical step in the process.

Some family business leaders want to stay on with the company in an advisory role; others are eager for a clean break. They see their next journey as a focus on travel, philanthropy, a new hobby or some well-earned rest and relaxation.

The reality is, it’s hard to anticipate how you’ll feel when it’s all said and done. Major life transitions take time to get used to. That’s why focusing your priorities in advance is so crucial. It’s important to then share those expectations with organizational leaders and family members about how family leaders want to spend their days now that they’re no longer running the family business.  

Finding the Right Navigation Partner

External partners can act as trusted navigators in liquidity event planning and execution. Like a GPS app, they can help keep your plan on course and reroute you when you encounter unexpected delays or detours. Prioritize outside teams that can augment business planning with resources and expertise on governance and family relationships. The right partner can help advance a liquidity event into an opportunity to reevaluate family priorities and strengthen a family’s legacy following a major transition.


About Pitcairn

Pitcairn is a true family office and leader in helping families navigate the challenges and opportunities created by the interplay of family and financial dynamics. Through Wealth Momentum®, an experience-based family office model, Pitcairn helps families achieve a more effective and complete experience. Since its inception, Pitcairn has partnered with some of the world’s wealthiest families to meet their needs and drive better outcomes – year to year, decade to decade, generation to generation. Today, Pitcairn is recognized as an innovator, guiding families through generational transitions and redefining the industry standard for family offices. The firm is located in Philadelphia, with offices in New York and Washington, DC and a network of resources around the world.