Generational Guidance – Strategy That Honors Legacy

Family-owned businesses are a significant portion of Stephens clients. They are especially predominant in the Dealership sector, comprising the vast majority of those businesses. As a family-owned business itself, Stephens is uniquely positioned among financial services firms to understand and help family businesses with their challenges and aspirations. Learn more in this edition of Capital Thinking: Generational Guidance – Strategy That Honors Legacy.

Full Video Transcript

Stephens is now in its third generation of family ownership. This perspective as a large institutionalized family business while also being a full-service investment bank gives us a unique ability to advise family-owned businesses as they navigate opportunities and challenges.

Joe: Dana, you and I have been working together here at Stephens, actually in this very building for over 25 years.

Dana: Long time.

Joe: During that time, we've dealt with a lot of big public companies, literally hundreds of public companies in our experience here and and working with our colleagues. But I think where Stephens thrives and certainly where you and I have spent a lot of time together has been in working with and advising private family-owned businesses. Can you talk a little bit about some of the things that are top of- mind for those private companies that we meet?

Dana: Advising private and family-owned companies really covers all of our industry groups across our entire M&A practice. So, it's really important and these are owners who have built fabulous companies, growth over the years, but many of them might come to us when they start to think about the future. Maybe raising capital to fund some growth. Possibly there's a family member who might want to exit. They might be thinking about succession planning. And so we help them think through what is achievable in the private capital markets and really help them think through these important strategic decisions so that they can maximize value while still preserving the company culture.

Building a Family Office Strategy

Joe: Yeah, you mentioned that we get to meet a lot of fabulous companies and many of the companies that we meet, they achieve that success organically, if you will. They built their businesses by reinvesting their profits into growth, but they may not have necessarily consummated any kind of a strategic transaction. And so that's where we can help them understand what they might be facing or what their opportunities might be when it comes to some type of capital raising transaction or other strategic transaction.

Dana: Whether it's a private equity partner, a debt financing solution, a family office partner, we help them think through all of those alternatives and we can help them navigate change. They might want to expand into a new geography. They might not know how to fund it. And so we can really help them consider all of the possibilities in the private capital markets, but walk through that process with them every step of the way.

Family-Owned Dealerships in Local Communities

Joe: What would you say are some of the similarities that we run into with family-owned dealerships versus all the other family-owned businesses that you deal with across Stephens?

Dana: Many of those private and family-owned businesses are large and complex, but there are probably more similarities across industries with family-owned businesses than there are differences. The family dynamics, the succession planning, who is in leadership, where do we go from here? In the dealership world, the local impact of strong dealers is so critical to the communities. There are often leaders in the chamber of commerce. They're leading every charity fund drive. They're supporting the local baseball team. When we embark on a transaction in that setting, you really have to consider the concerns of the ownership group and really help them think through how any transaction can preserve the culture they've built and take care of the dealership family.

Stephens as a Long-Term Advisor for Family Businesses

Joe: So, one of the things that we often talk about, Dana, is the fact that we aspire to be a long-term advisor and really a partner to our clients. We don't want to just have a situation where we help them execute on one transaction and then ride off into the sunset. To the contrary, we want to look around corners and we want to help them think about how to write the next chapter of their story. Can you talk about some of the things that we do there?

Dana: We truly want to become the trusted advisor to the family and that starts in the preparation before a transaction through every negotiation and then long after. These families often think in terms of generations not quarters. And so when we have the opportunity to help them, whether it's diversifying their investments, creating a family office, we really do try to earn that trusted advisor role, not just for the transaction, but for the future.

Joe: Yeah, and I'm glad you mentioned family offices. I mean, we often talk about family offices being great partners, potentially great partners in the dealership world, but you mentioned the opportunity to actually create a family office and and we've had a great situation or a case study, if you will, where we advised an extremely large dealer in this space several years ago on his liquidity event. And after that event, he in fact did set up a family office and it's been very rewarding to us at Stephens. We've been able to continue our relationship with this dealer and the team that he has established there at his family office. We continue to show them ideas in the dealership space to a degree, but also across several other industry groups. And that's really rewarding for us to be able to maintain that kind of a relationship.

Dana: Joe, to advise these families on these important milestones. It's not just a transaction for the company and the family. It's a milestone in what they've achieved in their careers. It's very rewarding to earn the right to be their trusted adviser, as you know. And so, when we have the opportunity to help them establish a family office, to help them look into the future, it's why we're here. It's absolutely the role that we want to have as their trusted adviser.

Joe: Exactly. That's what Stephens is here for.

Dana: And has been for a long time.