Article  |  May 2015  |  by Peter Creaghan  

The Family Capital Assessment is a tool that allows you to quickly check the status of your family capital. 

  1. Independent Advice. An independent outside view is critical to success. An independent board of directors in particular, where 60% or so of the board is non-family, brings outside views and independence to decision making. 
  2. Coordination among family owners. Each of the owners needs to understand the current and future plan for ownership. Some family offices spends 90% of their time on conversation, explanation, and education to engage each owner in the planning process.
  3. Family Purpose, Family Office. Understanding the family objectives within the business objectives aligns family members behind a common purpose. After all, the business is an extension of the family’s values and vision. Creating a Family Office facilitates impeccable communication and alignment. 
  4. Liquidity. A Liquidity Policy is an essential consideration for family-owned companies, which face specific challenges such as generational liquidity events and buyouts of family members. There are numerous strategies for dealing with dividends, valuation, pricing, and funding.
  5. Transparency. Transparency of financial and other information appears to be a key secret and a key challenge at the very same time. Transparency is difficult, requires energy and resourcing, but appears to be the secret to good results. It is crucial to avoiding breakdown in the future. The cost of a squabble can cost tens of millions. The cost of proper governance, including boards and advisors, is much less



Peter Creaghan is a CMG co-founder and partner. He’s a past Chair of the Conference for Advanced Life Underwriting (CALU), as well as a speaker and current charter member.