Commentary: Education Planner

| FROM THE PRINT EDITION |
 
 

As high unemployment continues, college students and their parents want to know what employers are looking for. While almost any business needs employees with specific skills — market analysis or web

development, for example — students can be trained in those areas. What top employers look for when hiring new employees, according to a survey by the American Association of Colleges and Universities, are the capabilities that a broader education provides: critical thinking, complex problem solving, strong communication skills, civic responsibility and the ability to lead.

Why? Because employers realize that with the world changing so quickly, it’s impossible to know what challenges their employees will face tomorrow. Graduates of top liberal arts and sciences institutions have the versatility to respond to that ever-changing environment.

It’s true that the recipient of a liberal arts education may not be as “real-world ready” at graduation as a student who chooses a more targeted, vocational college curriculum. But students who are educated in a narrow field are out of luck if there are no jobs in that specific industry or sector.

We believe that combining a broad liberal arts education with experiential learning opportunities is the best way to prepare students for an ever-evolving workplace. Whitman College graduate Jonathan Sposato is a great example. A politics major, Sposato combined his liberal arts education with his real-world experience as a bartender and his time as a Microsoft employee to help launch two startup companies — both of which were sold to Google — before going on to cofound the online tech news site GeekWire.

Of course, undergraduates everywhere should be more prepared for real-world job seeking. To do that, colleges need to do a better job of connecting students with employers and the wider community, helping them build a network of contacts and opening their minds to emerging industries and organizations.

One example of the many opportunities students have to connect with influential business leaders occurred recently on our campus when alumna Megan Clubb, the president and CEO of Baker Boyer Bank, spent time networking with Whitman students at an informal gathering. Clubb, who is also a San Francisco Federal Reserve Board member, started her undergraduate career at the University of Washington studying oceanography before transferring to Whitman to major in economics. We also see great opportunity for those with a liberal arts background in the expanding world of entrepreneurship. In an age when students can create and run startups from their dorm rooms, an M.B.A. is no longer the gatekeeper to running a business.

To encourage our undergraduates to apply their critical thinking skills to entrepreneurial solutions, Whitman recently collaborated with Walla Walla Community College, Walla Walla University, the Walla Walla Chamber of Commerce and the Small Business Development Center to hold a business plan competition. Contestants were asked to propose creative solutions to the issue of glass waste, a problem that arises because we don’t have glass-recycling facilities in our part of Washington state. Local students submitted a number of impressive business proposals that detailed innovative ideas focused on sustainability, feasibility and profitability. The winning proposal suggested crushing and tumbling waste glass to create glass pieces that look like natural sea glass for use in home décor and landscape design.

Students should continue to see the value in pursuing a broad education, and employers should recognize that there is no substitute for an employee who knows how to question, how to think and, more important, how to creatively solve both the problems we see today as well as the problems we have not yet foreseen.

Kimberly Rolfe is director for business engagement at Whitman College in Walla Walla. She specializes in connecting students and recent graduates to internships and career opportunities in the private sector, as well as providing training and experiences that will prepare them for career entry.

Looking for high investment returns? Consider investing in a family business.

Looking for high investment returns? Consider investing in a family business.

 
 

Investors do not lack opportunities to deploy their capital, but being able to generate respectable returns is much more difficult. Part of the problem is finding unique investment opportunities with significant upside in a crowded market. The best option may be to put money to work in a privately-held company.

But private companies pose challenges when it comes to understanding their business, and analysis of the company may be fraught with pitfalls. Or it may be that investors are simply not aware of the opportunity in the first place.

There is, however, an important trend that is clearly discernable in relation to family-held businesses. Wealthy families and individuals are increasingly attracted to the idea of providing capital directly to family businesses as part of their overall investing strategy. And the attraction is reciprocated – family-owned businesses are increasingly open to the idea of wealthy families and individuals providing capital.

At Cascadia Capital, we are seeing a rapid increase in the practice of families investing in families, which can be a highly effective solution for both businesses and investors. Family businesses can be attractive investments, particularly for other family businesses, private companies, individuals, or family offices, which are wealth management companies investing on behalf of a single family or individual. Family run businesses often employ management styles that these investors understand well and can offer portfolio diversification without the hefty fees charged by private equity funds and investment firms; fees that, over time, can add up to millions of dollars.

According to a recent survey by the Family Office Exchange, about 70 percent of family offices now pursue this strategy of direct investing. This may be, in part, due to a shift by family offices seeking to bypass layers of fees and a lack of transparency and control that are inherent to the private equity fund model. Instead, many family offices now prefer to invest directly on a deal-by-deal basis offering more direct control, additional flexibility for longer-term holds, and lower fees. 

From the perspective of family businesses, a significant number are considering alternative solutions to meet their strategic objectives. In the event of a sale, an acquisition by another family can be a compelling solution compared to a private equity or strategic buyer transaction. And when seeking financing for business activities, direct investments from family offices can offer significantly more flexibility than funding from private equity firms that are beholden to rigid criteria and fixed investment periods.

 

The benefits for family businesses of having a direct relationship with their investors or buyers can be numerous. For example, if a family is looking to sell its business, family office buyers can provide liquidity and the opportunity for owners to exit without having to sell to a competitor. If a family is looking for additional financing to fund growth, direct family office investments can offer more favorable terms than other traditional sources of financing.

 Importantly, wealthy families and individuals are more likely to take a long-term view of their investment and are not constrained by exit strategies devised to maximize value within a given time period. Further, these investors often made their money owning and operating successful companies and, as a result, are more likely to understand the nuances and unique challenges of family run businesses. 

This investment trend, while also being experienced in other parts of the country, is gaining momentum in the Pacific Northwest. We are increasingly finding private direct investments to be an effective solution for our family-owned business clients and our family office clients.

Choosing the right investment partner is one of the most challenging decisions a family business can make. We have worked with many private, family run businesses to design long-term, flexible capital solutions and introduce our clients to suitable family office and private investors with common objectives.

 For family offices, like any investment opportunity, buying into family businesses can be very attractive, but it is not without risk. Prior to investing, proper analysis calls for extensive financial due diligence to ensure interests and incentives are well aligned in the transaction. Success depends on ensuring both a structural and cultural fit. We actively encourage family business owners and family investors to work with experienced advisors to carefully explore every available option before determining the best course of action.

Christian Schiller is a managing director at Cascadia Capital, specializing in advising family businesses. Cascadia Capital is a Seattle-based investment bank serving middle market clients, globally.