PETER MAY Family Office Service

With our professional consulting services, our workshops and continuous process support, we support owner families, family businesses, family offices, family-related investment companies and foundation companies with the following services:

In recent years, the PETER MAY Group has built up a sustainable network of well-capitalized family businesses, entrepreneurial families and family offices that show an interest in investing in other family businesses. These family equity investors from our personal network are oriented towards long-term, stable investment with sustainable dividend yields. Depending on the individual case, they also offer their services as strategic sparring partners and support the family business with their expertise and their own network.

Before considering talks with a potential investor, owner families ask themselves many questions:

• What return expectations do investors have?
• Do investors want to be involved in the business, and if so, to what extent?
• For which issues do investors expect voting rights or at least a right of approval?
• What options are there for repurchasing shares in the company and what are the usual arrangements?
• What role do investors play in a supervisory body (supervisory board, advisory board)?
• How do we ensure the family's degree of freedom, for example, in filling functions and roles of family members in the family business?

When we support entrepreneurial families in their owner-strategic discussions and in structuring these considerations, we repeatedly find that many would like to talk to a family equity investor, but do not have access. We provide that access. Personally. Confidentially. And with a lot of experience.

We support family businesses, family offices and family-related investment companies in the performance of financial due diligence, mostly in the case of investments in other family businesses. In the financial analysis of family businesses, special features compared to other types of owners often have to be taken into account, starting with

• the interlocking of operational and private ownership levels,
• the rather cautious interpretation of accounting and valuation options,
• the existence of parallel groups for the purpose of external transparency avoidance,
• disproportionate ownership interests of individual family members
• and in particular the experience in dealing with the understanding of values and the language of a family business.

In the vast majority of cases, the regulations for a transfer of shares within the family of shareholders are represented in a partnership agreement. They were often made many years ago and may no longer be up-to-date and appropriate due to a change in the number of shareholders or a change in assets.

Valuation formulas for a compensation payment are often simply defined in order to keep them as comprehensible as possible. But this documented comprehensibility often leads to a lack of understanding in practical application. Agreed valuation discounts that support an acquirer's financial viability have moved away from a valuation that a third party would pay. The discrepancy resulting from this can lead to a high level of dissatisfaction on the part of the shareholder willing to sell and complicate the entire transfer process, even if there is fundamental agreement on the matter.

One of the factors that often leads to conflict in the discussions is the fact that

• Key figures that refer to past fiscal years for the purpose of determining value do not take into account expected growth and innovation potential.
• Ratios based on earnings power neglect actual liquidity generation and distributive capacity.
• additional asset structures have often developed alongside the family business which have performance relationships with the family business (such as real estate held as private assets, rights, further business interests, subgroups) and which influence the earnings power and liquidity situation of the family business through performance or financing transfers.

Even if regulations in partnership agreements are often deliberately formulated in a simple and unambiguous manner, in rare cases it may also be advisable to seek solutions 'on one's own'. Since in this situation there is often a lack of the individually necessary distance of the persons concerned to point out decision and solution paths and to implement them with sufficient emotional neutrality, we bring the objective point of view into the discussion.

• Disproportionate ownership interests of individual family members
• and in particular the experience in dealing with the understanding of values and the language of a family business.

Many entrepreneurial families ask themselves how they can generate further growth capital for their family business. In this context, there is a growing openness to raising (outside) equity capital by taking on a (family) equity investor. A comparable question arises as to how a share transfer can be financed within the family and whether financing through a (possibly temporary) partial sale to an outside shareholder can represent a solution variant.

In our workshops for entrepreneurial families, we discuss and answer questions concerning the organization and implementation of a possible share transfer within the family, the possible opening of the shareholder group for external equity investors, the design of possible partnerships with family equity investors, the company valuation as well as topics of asset organization following a possible share transfer.

We frequently encounter questions regarding

• Minimum shareholding of a family equity investor
• Return requirements
• The structuring or limitation of voting rights
• Governance issues
• Transfer of ownership back to the family after a certain period of time

Above all, owner families ask themselves which family equity investor or which type of investor suits the family at all. But owner families also want to know:

• Isn't there, after all, an internal family solution or other way of raising capital, such as taking out loans, selling subdivisions and business activities?
• Isn't there also the possibility of the family business acquiring the shares (capital reduction) when it comes to the retirement and compensation of a shareholder?

We discuss these questions with the families on the basis of our many years of experience in dialog with entrepreneurial families on the one hand, and family equity investors on the other. With our support, many entrepreneurial families have become investor families in recent years.

In the process, we also clarify numerous organizational questions with owner families:

• How long does a possible share transfer process take?
• What does it cost?
• Who needs to know about it in the company, who needs to be involved?
• How do I ensure confidentiality in the internal organization of the family business, towards customers, suppliers, employees?
• Which information is really necessary for whom?
• At what level could an investor enter (group, sub-group, individual company, NewCo, etc.)?
• How do we approach potential investors?
• How do we gain access to potential investors?
• How do we ensure the confidentiality of the interlocutors?

The design and duration of the workshops, in which we address all strategic and organizational issues relating to the possible acceptance of an investor, are individually tailored to the questions posed by the family. Decisive factors are, among others, the number of participating family members as well as the complexity of the family's assets and the joint search for possible solutions that take into account and integrate the needs, wishes and ideas of all family members.

Usually only very large family businesses have in-house expertise in the organization, support and implementation of share transfers. And even in these cases, owner families usually do not want the specialist level within the family business to be involved in the sensitive and discreet issue of transferring shares in their family business - whether within the owner family or in the case of a possible transfer of shares to a third party. And the vast majority of family businesses often do not have their own personnel capacities for the subject areas of a company purchase or sale. Corresponding events occur too rarely for that.

The team of PETER MAY Family Office Service has decades of experience in this field from working in investment banks, auditing companies, the corresponding departments of large listed companies and also from its own entrepreneurial activities in the family-owned company. We bring this expertise to bear in assisting owner families in all relevant issues relating to the conception and implementation of a share transfer - from the preparation of the necessary information, the valuation of the company, the structuring of the object of the transaction, the search for investors, the preparation of financing plans to the drafting of the participation agreement. We take over the overall project management of a personal 'temporary M&A department'. We also assist in the selection of possible external advisors, understand their interests, know the usual conditions, costs and expertise of M&A advisors, lawyers and tax consultants and help the owner families in the translation of standard market procedures.

Jörg Hueber

Jörg Hueber has been advising business families, family businesses and single-family offices on financial issues for more than 20 years and can draw on a broad range of experience in the areas of shareholder remuneration, investment valuation, financial due diligence and the purchase and sale of equity holdings. His distinct understanding of the business processes in family businesses, on the one hand, and the special relationship between family and business, on the other hand, helps him strike a balance between the interests of all family members in consulting processes.

Isabel Wessel

Isabel Wessel is a member of PETER MAY Family Office Service GmbH & Co. KG in Hamburg. She advises entrepreneurial families, family business and single offices on financial issues with regards to the adequacy of shareholder compensation, asset allocation within entrepreneurial families, financial valuations, financial due diligence and the identification of investment prospects. Other key focus areas revolve around the allocation and transfer of business assets and responsibilities from one generation to the next in order to guarantee a smooth transition in terms of both business and family matters at hand.

Madleen Buchar

Madleen Buchar is a member of PETER MAY Family Office Service GmbH & Co. KG in Hamburg. The key focus of her work relates to financial issues surrounding the organization of company transactions and financial valuations, particularly with regards to the transfer of shares amongst family members and family branches. Madleen Buchar additionally assists her clients in identifying corporate investment prospects and supports them along the corresponding implementation process.

Dr. Matthias Händle

Matthias Händle is the business owner within the PETER MAY Family Business Consulting team. After many successful years at the helm of his in-laws’ family business, he decided after its sale that he would like to pass on the skills and experience he had acquired to other family business owners in the future. As a sparring partner, coach and advisory board member, Matthias Händle knows exactly what he’s talking about, from finding the right owner strategy to preparing for or adapting to a new role.