If you had to pick one lever to pull to increase business value, which one would it be?

Well for me, there’s absolutely no doubt which lever I would pull. It would be the lever that would enable me to systematically, over time, create the absolute greatest level and implementation of good corporate governance.

In the successful multigenerational transitions I have seen, there has almost always been evolution from an entrepreneurial business model to what I call a kind of quasi-public company corporate governance model where the family company has both family member and independent directors, where there may be non-family business advisors with industry-specific operating experience, and where there are arm’s length executives running one or more of the family businesses if it’s a diversified enterprise. There’s absolutely no doubt that the thing I would look to as my number one initiative to increase business value over time would be to continually improve corporate governance.

Now, I think the right question to ask any entrepreneurial business owner who is contemplating what direction he or she should take in business transition is:

"Would you yourself buy an illiquid minority interest in your business given the current and prospective degree of corporate governance in your business?"

I’ll bet you that most of them would say, "Not a chance. I wouldn’t buy it."

If that’s their answer, then they’ve got a couple of choices. One is that they’ve answered their own question as to whether or not a generational transition is likely to work for them, and the second thing they ought to be thinking about is how do I best prepare my business for sale at a time I think opportune.