How Proactive Engagement with Capital Partners Boosts your Competitive Advantage

By Stephen Brown, Market President, Cincinnati/Northern Kentucky Region for Stock Yards Bank

Historically, most business owners rely heavily on the advice of accountants and attorneys when making decisions critical to the financial success of their company. These partners, justifiably so, are integral to the success of closely held and family businesses and need to be involved. However, it is just as important to understand the potential value that can be added by capital partners during major financial decisions.  

Capital partners include Community Bankers, Investment Bankers, Private Equity Firms, Investment Advisors, and Mezzanine Lenders, among others. Capital partners need to earn their seat at the table with business owners by showing their value in helping to structure the capital stack of the business.  Speaking as a banker, we respect the business owner’s relationship with their accountants and attorneys, but also recognize we can serve as an advisor whether you are looking to merge, acquire, expand, sell, or transfer your business to family members or current management.

Let’s delve into the idea of transferring your business to family members or current management members.

For business owners, this might be one of the most difficult and stressful decisions they will ever make.  Having a solid strategic plan with the assistance of your accountant and attorney is the critical first step.

The next step, which needs to be done early, is to communicate the plan to interested partners.  Involving your banker or other capital partner earlier in the process can pay huge dividends for a business owner by identifying capital resources, shoring up potential capital gaps, and, most importantly, helping to reduce the expected level of anxiety related to the transfer of your business.  

Here are some key questions and thoughts related to the transition:

  • How will the decision process be made? Who will you sell to? Are there operational changes associated with the change? How will conflicts be handled?
  • What is the timing of the transition? Is there a transition period and, if so, how long?  Are there external influences (tax issues, market effect on pricing, etc.) that create deadlines?
  • What kind of financing requirements – short term, interim, or long term – will the transfer require? Will there be a need for trusts to be established? Are there insurance, tax, or other financing requirements? Are there liquidity considerations that need to be considered?

Several of the questions above can be answered when you include your banker early in the process.  

If debt will be incurred with the transition, your banker will be able to underwrite the deal, which will help determine if the potential transaction is doable. If it is, then we can start to structure the transaction to best benefit the impacted parties. Being ahead of the process with your banker helps in negotiations to best benefit the owners when they do decide to transition the business.  

The transition of your business is just one example of the benefits of involving your banker early in the process. The banker can earn the role of an advisor for a business owner by developing a relationship with the company, which takes time. Bankers that take the time to learn about a business, get to know the accountant and attorney involved with the company, and gain a true understanding of the business are the bankers that will earn a seat at the table.

Looking forward financially can be daunting and complicated, but the good news is that your partners are often more than willing to help you realize goals. Invite your banker and other capital partners to the table for your next big move and see what you can accomplish together.

For more information, contact Stephen Brown at 513-824-6104 (office), 513-235-9884 (mobile), or

Stock Yards Bank is a Goering Center sponsor, and the Goering Center is sharing this content as part of its monthly newsletter, which features member and sponsor articles.

About the Goering Center for Family & Private Business

Established in 1989, the Goering Center serves more than 400 member companies, making it North America’s largest university-based educational non-profit center for family and private businesses. The Center’s mission is to nurture and educate family and private businesses to drive a vibrant economy. Affiliation with the Carl H. Lindner College of Business at the University of Cincinnati provides access to a vast resource of business programing and expertise. Goering Center members receive real-world insights that enlighten, strengthen and prolong family and private business success. For more information on the Center, participation and membership visit