For family businesses, the question of “what’s next?” can be as complex as it is personal. Many families are currently weighing whether to transition the business to the next generation or consider a partial or complete sale. With recent changes to Business Property Relief (BPR) and Agricultural Property Relief (APR), there’s a renewed need for thoughtful planning. Enter “patient capital,” a form of investment that offers family businesses the time, flexibility, and stability to grow at their own pace, allowing them to keep sight of their long-term vision and legacy.
This type of investment, often provided by private investment or family offices, is proving a valuable option for families looking to balance today’s challenges with tomorrow’s opportunities. Today, an increasing number of family businesses are being drawn to patient capital as they consider their next steps.
Why Patient Capital?
Patient capital is different from conventional financing, like bank loans or traditional private equity. It’s designed to support businesses over a longer timeframe, allowing for strategic growth without immediate pressure to deliver returns. Instead, the focus is on sustainable, measured growth that respects the unique values and goals of the family business.
For many family-owned businesses, this approach is appealing. Patient capital enables them to develop without quick-return demands, helping the family stay connected to both the heritage they’ve built and the stability they wish to maintain.
How Patient Capital Supports Family Businesses
Patient capital’s strength lies in its adaptability and alignment with the values that matter most to family businesses:
Creating a Path for Generational Transition
Many families want to see their business continue under the stewardship of the next generation. Patient capital offers a financial base that supports a steady, well-planned transition, giving the next generation both time and resources to step into leadership confidently.
Providing Options for Gradual Ownership Transition
For families who are considering liquidity but not a complete exit, patient capital can be structured to accommodate gradual transitions, like management buyouts or minority stake sales. This approach allows families to reduce risk without stepping away completely, making space for thoughtful change.
Respecting Legacy and Values
Patient capital providers often appreciate the importance of continuity and tradition in family businesses. By understanding the value of legacy, they offer the expertise families may seek without disrupting the identity or culture that has been carefully built over generations.
The Impact of BPR and APR Changes on Family Planning
The recent changes to Business Property Relief and Agricultural Property Relief have created new tax considerations for families thinking about succession. These reliefs have traditionally helped families manage tax obligations during generational handovers, supporting the viability of family succession. Now, as the regulatory environment changes, many families are reassessing whether to continue in this direction or explore other options, including partial or full sale.
Patient capital may offer a way forward in this new environment, providing tax-efficient structures and flexible funding options that can help families manage their immediate needs while preserving their long-term plans.
How Patient Capital Compares to Traditional Finance
Choosing the right financial approach is often about much more than funds; it’s about protecting the family’s values, legacy, and vision. Here’s why patient capital may stand out to families at this stage:
Customised Capital Structures
Patient capital can be adapted to the unique needs of the family business, with options for flexible share classes and tax efficiencies that benefit both family members and outside stakeholders. This ability to tailor the structure is particularly helpful when supporting multi-generational interests or accommodating diverse family goals.
Expertise and Strategic Input
Many patient capital providers have years of experience in family business matters, offering guidance on governance, succession, and growth. They often bring in knowledgeable advisors and can introduce proven individuals to enhance the leadership team, respecting family values and lending valuable perspective.
Time for Meaningful Growth
Unlike traditional private equity, which is focused on short-term gains, patient capital supports a steady growth approach. It allows families to prioritise sustainable growth without the immediate return pressures that can sometimes disrupt the natural evolution of a family business.
Considering Patient Capital for the Road Ahead
For family businesses planning the next stage of their journey, patient capital may offer a pathway that respects their legacy, goals, and values—whether the family envisions passing the business down, exploring a partial sale, or staying closely involved in the company’s future.
In a time of economic and regulatory change, patient capital can provide a way for families to maintain control over their business’s evolution while adapting to new realities.
For those at the crossroads of succession and sale, patient capital is an option worth exploring—an approach that understands the family’s past and supports its future with stability and thoughtfulness.
About the author: David Twiddle, Managing Partner at TWYD & Co, is a seasoned entrepreneur and family business owner with direct experience in generational transitions, as well as partial and full exits through trade sales and private investment. Today, David advises families on the ‘people’ side of family business, collaborating with advisors and finance providers to create solutions that meet both immediate and long-term family needs while safeguarding their values and preserving their legacy.
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