The four owners of a family business disagreed on how to handle liquidity and dividends. The two owners who were active in the business wanted to reinvest the large majority of liquidity every year in order to grow. However, the two nonactive owners, who were receiving limited dividends, resented this. They worried the active owners would draw a bigger salary as the business grew more profitable.
BBH worked alongside the family and a valuation company to identify the common reinvestment rate among companies in the same industry. Taking this information and the needs of the parties involved into consideration, the family developed a solution.