11 Potential Private Company Dividend (or Distribution) Policies

Your Company Does Have a Dividend Policy

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Two standard questions business appraisers ask clients in the management interview process include: What has been your dividend (or distribution) policy leading to the present?  Now this is something of a trick question, because we can infer what the dividend policy has been in the past based on examining financial statements. What do you expect […]

Leveraged Dividend Recapitalizations and Leveraged Share Repurchases

Understand the Similarities and Differences and Which Transaction May be Right for Your Company

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Leveraged dividend recapitalizations and leveraged share repurchases are two corporate finance tools that are available to owners of private companies. These tools can be used to create liquidity outside the ownership of private businesses. Interestingly, as we will see, leveraged dividends and leveraged repurchases have very similar impacts on companies (assuming similar companies and same-sized transactions), and quite different impacts on the owners of the companies. In this post, we will illustrate the impact of a leveraged share repurchase and a leveraged dividend on the same company. This analysis will enable us to see the impact leverage has on the company and also, the different impacts the transactions have on owners.

Is Your Business Ready for Sale?

First in a Series on This Important Question

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“Is Your Business Ready for Sale?” is one of the most pressing question facing business owners today. And the question is important for advisers to businesses, since we are instrumental in asking hard questions and, indeed, have the responsibility for asking hard questions of our private company clients. At the outset of a new series of posts, let me say categorically, I am not, not, not suggesting that your business should be up for sale. Bear with me while we focus on the actual question of “Is Your Business Ready for Sale?”

Your Company Has a Dividend Policy

Even If You Don't Think So

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When speaking to business owners in management interviews, I always ask a couple of question: What has been your dividend policy in the past? And, what do you expect it to be going forward? Interestingly, many business owners reply that they don’t have a dividend policy. At that point, I reply that they have had a dividend policy historically, and that they will have a dividend policy prospectively. Considering this, we seek to answer what is a dividend payout ratio and what are the types of dividends?

The Stock Market is “Plunging” But There is No Panic in the Private Company Business World

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With oil prices dropping briefly below $40 per barrel on Friday (August 21, 2015) and the stock market dropping sharply in the recent past, investors in the public markets are being advised not to panic. The headline for the front page of the Saturday/Sunday Edition of The Wall Street Journal (August 22-23, 2015) reads “Stock Plunge Picks Up Speed.” In light of the circumstances, what happened to the value of closely held and family business in America over the last week?

Where Do You Want the Ownership of Your Company to be in 3, 5 or 10 Years?

Part Two

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This is the second in a two-part series: Where Do You Want the Ownership of Your Company to be in 3, 5, or 10 Years? In this first post, we introduced the Ownership Transfer Matrix. In the this concluding post, we dive deeper into the ownership question.

Where Do You Want the Ownership of Your Company to be in 3, 5 or 10 Years?

Part One

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This is the first in a two-part series: Where Do You Want the Ownership of Your Company to be in 3, 5, or 10 Years? In this first post, we introduce the Ownership Transfer Matrix. In the concluding post, we dive deeper into the ownership question.

Would You Rather Sell up to Half Your Company to Get Liquidity or Engage in a Leveraged Dividend Recapitalization and Keep All of it for Your Owners

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Recently I spoke with a business owner who had almost sold about half of his company to a private equity investor a few years ago.  The facts will be changed in this story so that neither he nor I should be able to recognize his company.  However, the conversation highlights a potential opportunity for owners […]

Interim Time and Your Business End Game

Preparing for the End of One Thing and the Beginning of the Rest of Your Life

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This post introduces the concept of “interim time,” which is the easily lost time between two critical goal posts in the life of a business owner, his or her current status quo and their business end game. It is, after all, what we do during this interim time that prepares us not only for our inevitable business end games, but also for the rest of our lives.