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Shared family wealth strategy

A holistic framework for sustaining multi-generational wealth

Why do family businesses need a framework for shared family wealth?

There are many different ways to use shared family capital, whether it’s growing the business, investing in sustainability or philanthropy or supporting the family’s lifestyle needs. As the family business(es) and wealth grow and become more complex, it’s increasingly difficult to get a full picture of all the moving parts and effectively manage and oversee the shared portfolio. When that happens, it’s easy to lose sight of how the family capital aligns with the mission, values and objectives of the family—the glue that keeps it all together.

We’ve created a framework to help family enterprises get a full picture into shared assets and the sources and uses of capital. The framework creates the structure and required components to gain alignment of all stakeholders and necessary parties, including family members, advisors, other entities and outsourced portfolio managers that may also work with the family. When all the required components work together, the path to achieving your desired outcomes will become more clear.

Inventory of shared family capital

The framework provides a mechanism to balance across the objectives and needs of the operating business and of the family itself, at all stages of maturity.

Growth

Operating company(ies)

  • Organic growth
  • Acquisitions
  • Reducing debt
  • Capital calls

Financial investments

  • Diversifying into other growth-focused liquid investments
  • Diversifying into direct private equity investments or other illiquid investments
  • Diversifying into real assets, eg., real estate

Spending commitments and enjoyment

  • Corporate social responsibility initiatives
  • Venture philanthropy
  • Taxes

Stability and preservation

Operating company(ies)

  • Fund capital or reserve requirements in the operating company
  • Dividends

Other operating entities

  • Family office
  • Private trust company

Financial investments

  • Investments in traditional marketable assets
  • Management of philanthropic corpus
  • Investing in or maintaining passion assets like art, vacation homes, family farms, etc.
  • Providing liquidity to shareholders through share repurchases or loans
  • Estate and tax planning
  • Reinvesting returns

Spending commitments and enjoyment

  • Funding giving and expenditures bucket
  • Baseline lifestyle and personal investments
  • Family governance
  • Taxes

Giving and expenditures

Operating company(ies)

  • Corporate philanthropy
  • Community investment

Financial investments

  • Funding entrepreneurial ventures by family members

Spending commitments and enjoyment

  • Philanthropic gifting and grant making
  • Education fund
  • Family trips, reunions, conferences
  • Medical emergency funds
  • Life insurance
  • Lifestyle asset maintenance (planes, boats, etc.)
  • Taxes

About the white paper

In our white paper, we explain how to create a governance and operating model, and the reporting and measurement systems needed to successfully use the shared family capital framework and make sure your family business is around for generations to come.

This white paper is the culmination of a virtual event series, Family Wealth Continuity Webinar Series, Family Capital Strategy: A Holistic View, which took place between August and December 2020. The webinar, hosted by The John L. Ward Center For Family Enterprises and in collaboration with Egon Zehnder, introduced the family capital strategy framework and how best to apply it to family enterprises. Special thanks to German Herrera, Family Business Advisory Practice Global Co-leader at Egon Zehnder and Jennifer Pendergast, John L. Ward Clinical Professor of Family Enterprise and Executive Director of the John L. Ward Center for Family Enterprises.

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Contact us

Jonathan  Flack

Jonathan Flack

Family Enterprises Leader, PwC US

Danielle Valkner

Danielle Valkner

Family Office Leader, PwC US

Belinda Sneddon

Belinda Sneddon

Managing Director, US Family Enterprise Advisory Services, PwC US

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