Closely held and family controlled businesses that excel at the seven factors that characterize successful wealth creating family enterprises, as discussed in Highland Global’s The Seven Deadly Sins of Business Valuation: Closely Held and Family Controlled Businesses, typically are able to lower the firm’s cost of capital as compared to those firms that have yet to master the seven factors of successful transgenerational wealth creating enterprises.
While this lower cost of capital may serve to increase the value of the company, patient capital arising from mastery of the seven factors, particularly good relations between management and shareholders, may change the investment options for the firm. This in turn may further enable the company to create long-term wealth by investing in value-adding projects that would otherwise be rejected if the company’s cost of capital were higher.
Business Valuations By Highland Global 