Avoiding the Family Business Wealth Evaporation TrapAvoiding the Family Business Wealth Evaporation Trap
Follow a roadmap to success.
August 24, 2017
Many privately held family businesses unwittingly destroy shareholder wealth every year!
They do so by falling into what I call the “Wealth Evaporation Trap,” which results from three management flaws, all easily reversible but all potentially devastating to the owners if not addressed:
• First, leaders manage their business with a narrow and limited perspective, viewing it only as an “operating entity.” They fail to consider that the company is also a “financial investment,” in fact, often the largest part of the owning family’s overall wealth portfolio.
• Second, leaders fail to recognize the critical difference between company return on equity (ROE) and shareholder-realized ROE.
• Third, leaders fail to understand that their “conservati...
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