1 how do you describe the financial or other performance of your family business?
The present study investigates the link between family ownership/control/management and firm performance, focusing on financial relations. This study aims to reconstruct the existing theoretical framework and systematize the current state of knowledge, distinguishing between widely corroborated findings and those that have not been clearly substantiated. Towards this aim, the present work analyses 23 articles that were selected according to systematic review criteria in the most relevant databases for social sciences research. The lack of homogeneity in the results of previous studies suggests that the relationships between family business and corporate performance are complex and very probably moderated or mediated by factors that have not been included in these analyses. The main areas that need further investigation are as follows: (i) the multidimensional concept of performance and the shift from wealth creation to value creation, (ii) the validity and perspectives of theoretical approaches to the study of family firms, (iii) the family business definition dilemma and its implications, and (iv) the growing interest in privately held family firms. These topics represent strategic challenges and opportunities for future research.
2 in what ways your family economic needs in conflict with the family business finance and investing needs?
Growth capital is the money required for a business to fund its long-term strategic growth objectives. Examples of strategic growth objectives include acquisitions, joint ventures, major facility renovation and product-line, production and geographic expansion. Growth capital is contrasted with working capital (money for ordinary operating expenses, such as payroll, rent and inventory costs), maintenance capital (money for repairs and maintenance) or recapitalization capital (money for redeeming stock, special dividends or refinancing outstanding debt). Growth capital is typically larger in scale, more speculative in nature and more burdensome on businesses than other forms of capital. The substantial resources that are required to fund strategic growth objectives reflect the risk and rewards of the goals that are sought.
Growth capital comes in various forms with disparate terms and considerations.
Operating cash flow/retained earnings – Ideally, the cash generated from operations would be sufficient to fund expansion and growth.
Debt – Borrowed funds, typically from an investor or bank. Advantages of debt financing include the wide array of commercial terms that are available (e.g., short term vs long term, secured vs unsecured, guarantees, mezzanine, multi-tranche, special purpose vehicle borrowing, etc.), potentially higher returns on equity, the deductibility of interest expense for tax purposes and no dilution to family ownership. Disadvantages include tighter lending standards (especially on speculative new lines of business or acquisitions), restrictive covenants, burdens on prospective cash flow and insolvency risk.
Equity capital – Sale of equity entitling investors to "ownership" rights, including a portion of earnings. The company's organizational documents and state law govern the specific rights of equity holders. Depending on the form of organization, there could be significant flexibility to negotiate the voting and economic rights of equity holders, and those rights may differ between family and non-family owners. Frequently, investors have some preferred economic rights and limited voting rights, and they may also be entitled to special protections.
Hybrid instruments – Instruments incorporating features of both equity and debt, for example, convertible preferred stock, warrants or convertible debt.
Royalties – Accepting a capital infusion in exchange for royalty rights based on a percentage of sales or other metrics, sometimes paid in perpetuity or paid until the royalty holder has received some pre-determined multiple of its initial capital provided.
Sale leasebacks – The sale of property to a third party for cash today followed by a lease of the same property on a long-term basis.