New Research Report by Rothstein Kass Finds Nearly Half of Family Business Owners Considering a Sale Within the Next Five Years

ROSELAND, N.J., Oct. 19, 2011 /PRNewswire/ -- Rothstein Kass (www.rkco.com), a premier professional services firm to sophisticated financial services and business sectors, today published "When is a Family Business Not a Family Business," the latest in a series of research reports highlighting emerging trends impacting the communities it serves. Findings are based on a survey of 419 family business owners during the first quarter of 2011. The study indicates that nearly 47 percent of respondents are contemplating a sale of the business asset within the next five years, and also revealed stark contrasts between owners that are "business-focused" and those that are primarily "family-focused" in their approach to enterprise management. For example, while "business-focused" firms are slightly less likely to consider a sale, they are more than five times more likely to be presently taking steps to mitigate tax consequences from divestiture. Meanwhile, "family-focused" firms are more than 12 times more likely to agree that non-business family members are an influence on the business entity.

"Our previous surveys of family business owners had discovered that even among those pondering a short-term sale, the majority had not taken adequate steps to prepare. Many suggested that family discord was both a motivation for considering a sale and one of the concerns most likely to derail the process. At the same time, we encountered a number of businesses that were less affected by family strife due to their unwavering focus on enterprise management. Our latest research delved deeper into the family business community to explain this phenomenon. In the process, we discovered that over 40 percent of family businesses are so in name only, with family members not actively involved in managing the business," said Tom Angell, Principal-in-Charge of the Rothstein Kass Private Equity Practice. "Isolating legitimate business objectives from family issues and other outside distractions better positions the enterprise to support long-term objectives. The benefits of this strategy are apparent throughout the life span of the business, and can support a more orderly and profitable sale, whether owners ultimately intend to sell to private equity funds, strategic buyers, or transfer the asset to family members."

"When is A Family Business Not a Family Business" draws on the insight of the Rothstein Kass Private Equity Practice and Family Office Group. Survey respondents were required to serve as a senior officer at the family business and on the company's Board of Directors. All participating businesses are privately held, first-generation entities with a single family owning at least a 70 percent stake. Roughly 18 percent of participants report sales between US $10 and $30 million, and slightly more than 50 percent indicate sales between $30 and $100 million. The balance of respondents report average sales of $100 million or more.

Among other notable findings:

• "Family-focused" business owners (53 percent) are more likely than "business-focused" owners (38 percent) to consider selling the family business within three to five years
• Only approximately 10 percent of "family-focused" owners are taking steps to mitigate the taxes from the sale, compared with nearly 58 percent of "business-focused" owners who are taking such measures
• Less than five percent of "business-focused" owners indicate that family members are an influence compared with nearly 60 percent of "family-focused" individuals
• Equal percentages of "business-focused" and "family-focused" owners (72 percent) suggest that managing the business places a strain on their families
• "Business-focused" owners (63 percent) report a higher level of centeredness than "family-focused" individuals (37 percent)
• Highly centered individuals report average net-worth ($4.9 million) nearly five times greater than average net-worth ($1 million) reported by less-centered individuals

"Family businesses often take on the best and worst traits of their owners, making an even stronger case for the business-focused management model. Not surprisingly, owners of business-oriented family businesses report a greater level of personal satisfaction as well as significantly higher net-worth, on average. Explained simply, eliminating outside noise supports greater centeredness by reducing uncertainty and this clarity breeds contentment. More than 85 percent of centered business owners report that they are personally very happy with their lives versus 49 percent of less-centered individuals. Businesses managed by centered owners tend to be larger and more profitable than those that have not achieved such focus," said Mr. Angell.

About Rothstein Kass:

Rothstein Kass is a premier professional services firm that has served privately held and publicly traded companies, as well as high-net-worth individuals and families, for more than 50 years. As trusted advisors to our clients, Rothstein Kass provides accounting, auditing and tax services, as well as a full array of integrated services, to clients across industry spectrums and in all stages of organizational development. At the core of Rothstein Kass' remarkable success lies our commitment to hiring, developing and retaining employees that represent an entrepreneurial spirit mirroring that of the sophisticated business and financial services communities that we serve.

The Rothstein Kass Private Equity Practice provides essential and complementary professional services to private equity and venture capital funds and their portfolio companies across industry segments. The professionals of the Private Equity Practice advise clients on all aspects of private equity transaction, including financing and deal origination, as well as on organizational structure, audit processes and the management of operational and tax matters.

The Rothstein Kass Family Office Group offers a wide range of financial, wealth planning and lifestyle management services to family offices and high-net-worth individuals. Composed of seasoned financial professionals and certified public accountants, the Family Office Group applies proven expertise with the utmost discretion and attention. Clients include general partners of hedge funds and private equity funds, single-family offices and other segments of the high-net-worth community. The Rothstein Kass Family Office Group helped to pioneer the celebrity family office sector, and is also a specialist in serving the needs of athletes and entertainers. A division of the Rothstein Kass Commercial Services Group, the Family Office Group does not provide investment allocation, asset management or advisory services.

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SOURCE Rothstein Kass

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