Growth looks different for family enterprises—and today’s market presents both new opportunities and new decisions. In this 4th episode of Family Business Focus, Kirsten Vosen, U.S. Deloitte Private Audit and Assurance Leader, sits down with Laura Pearson, Deloitte Private’s U.S. Family Enterprise Leader, to explore how family businesses are navigating growth through capital access, M&A, and industry convergence. From a more favorable borrowing environment to the resurgence of deal activity and cross-industry expansion, this conversation offers practical insight into how family enterprises can invest, transform, and scale while preserving long-term ownership and control.
Kirsten Vozen [00:00:13] Hi, I’m Kirsten Vozen, U.S. Deloitte Private Audit and Assurance Leader. Welcome to the Family Business Focus, where we’ll cover topics of interest to family businesses. Throughout this series, we’ve been speaking with Laura Pearson, Deloite Private’s Family Enterprise Leader. Today, Laura and I will discuss growth for family enterprises. I’m really curious about her perspective and look forward to our discussion. Laura, welcome.
Laura Pearson [00:00:38] Thanks, Kirsten. I’m really happy to be here.
Kirsten Vozen [00:00:40] We know that growth can really come from innovation, from investing in your core businesses, from scaling the right operations, and certainly through M&A activity, all of which require capital. Talk a little bit about the changing interest rate environment and what it means for acquiring capital, particularly for our family enterprises.
Laura Pearson [00:00:59] Today is a much friendlier borrowing environment, at least relative to what we saw in 2022 and definitely early 2023. We’re now seeing an improvement across corporate debt markets, and not just in terms of the cost of capital, but also its availability. For instance, many family-owned businesses are now refinancing their debt at lower interest rates and allowing them to use the additional cashflow to replenish their product lines or invest in new products. There’s also a possible easing of some restrictive covenants and other terms and conditions that come with that capital. From direct lending to venture debt, the range of options and types of credit available to family enterprises is probably as extensive as we’ve ever seen. This presents an opportunity for family enterprises looking to make investments, whether it’s to fund new research or new projects or acquire new technology without diluting their ownership.
Kirsten Vozen [00:01:57] On the note of investments, let’s talk about M&A. Where do you see the M& A markets heading in 2025 and beyond?
Laura Pearson [00:02:04] Our M&A advisors say that there remains significant pent-up demand and increasing liquidity. After the bubble burst in 2021, we saw a pullback in 2022, pain in 2023, and the beginnings of a comeback in 2024. Many companies are now pursuing deals with their core competencies. If predictions hold, 2025 could see larger and more transformative deals. Lower interest rates may also improve M&A activity. We could see more private equity buyers flush with cash who are considering new alternative means to deploy their capital. This influx of investment dollars could fuel the trend toward larger and more transformative deals. Similar to a private equity firm backing a family-owned chain of businesses, investing significantly in digital transformation and elevating the company into a global player.
Kirsten Vozen [00:03:01] Oh, that’s exciting to hear. And speaking of transformation, how is industry convergence most likely to affect family businesses?
Laura Pearson [00:03:09] Industry convergence, meaning previously unrelated industries joining forces through the integration of products, services, or technology, is a theme in just about every market. It’s evident in our daily lives, whether it’s connected vehicles or wearables in healthcare. We see family businesses devoting resources to exploring growth in industries beyond their own, which really tells us that they see opportunity and value through convergence. In our research, private companies with a billion dollars in annual revenue reported spending a minimum of $50 million to pursue growth plans outside of their existing area of business. So industry convergence seems to be top of mind. Great discussion today.
Kirsten Vozen[00:03:57] That’s our time. Thank you so much, Laura. Thanks, Kirsten. I look forward to speaking again. And thank you for joining us on the growth episode of Family Business Focus.
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