AS an increasing number of family-owned businesses across the Caribbean reach pivotal succession points, concerns are mounting over how founders can secure an orderly exit after decades of leadership. One executive is urging capital market participants to fortify the region’s ‘capital bridge’, enabling these entrepreneurs to transition their companies smoothly and preserve their legacies.

This perspective was advanced by Andre Jeffers, Head of Strategy and Growth at Trinidad and Tobago-based Ansa McAl Limited, during his address at the fourth Capital Markets & Investor Conference, convened on 24 October at the Hyatt Regency Hotel, Port of Spain, Trinidad and Tobago. Jeffers, a featured speaker, presented on the theme ‘Future-Proofing Generational Businesses via Capital Markets in an Era of Transition’.

“Trinidad & Tobago has been built on the backbone of many generational founder-led businesses, and we are now currently in an era of transformation. I believe one of the solutions to the discussion of the panel around why we are not like some of our Caribbean counterparts, getting that level of activity, is because of the missing bridge,” Jeffers stated.

Family-owned businesses serve as a strategic pillar in economies worldwide, with founders and their descendants often driving these enterprises to new heights. However, by the third or fourth generation, interest in the family business frequently diminishes, as successors pursue divergent interests. This shift presents challenges for founders and owners, particularly when undertaking succession planning or considering exit strategies.

Jeffers noted in his presentation that, within the next decade, more than one hundred founding owners across the southern Caribbean are expected to retire, raising the risk of fragmentation, closure, or obsolescence among these businesses. This, he cautioned, could lead to the disappearance of the next generation of enterprises—not from a lack of will, but from a lack of viable pathways. Consequently, such circumstances may precipitate distressed sales rather than orderly exits for these founders.

“In more developed, deeper capital markets, the capital bridge allows those founders to have options around exiting and transitioning those businesses. In Trinidad, unfortunately, we do not have the bridge in the way that some of the developed markets do. The challenge that we face is that when legacy has no exit options, exit ends up happening by attrition as opposed to strategically,” the Ansa McAl executive stated.

Jeffers’ career has spanned both New York and the Caribbean, where he has advised on or directly executed corporate mergers and acquisitions, as well as private equity investments valued at more than US$12 billion.

The ‘bridge’ to which Jeffers refers is embodied in the role of private equity and private debt, supporting the transition of businesses while offering the prospect of double-digit returns to equity investors. Private equity commonly denotes investment by institutional investors or high-net-worth individuals in private companies, or in publicly listed firms slated to be taken private. In the realm of private debt, Jeffers highlighted the use of mezzanine financing and other forms of high-yield debt to fund acquisitions and expansion.

Whilst some companies pursue public listings, others are acquired by private equity investors who retain their private status. These investors typically aim to enhance the value of the firm through operational and strategic improvements. For founders, this ‘bridge’ affords the opportunity to preserve the legacy of their businesses whilst also enabling future growth, with the prospect of retaining an equity stake and building further wealth in the process.

“The reality is that in the developed markets, that [going public] is typically a bridge too far. Typically, what you see is that private equity comes in or institutional equity investment comes in and helps innovate, sets up governance, recapitalises the business and [then] prepare it over two-to-five-year horizon to the point of maturity to then list,” Jeffers explained.

An EY article by Laurent Capolaghi and Aude de Roquancourt indicated that 40 per cent of European family-owned businesses anticipate a change in leadership or ownership, but just 30 per cent had established formal succession plans.

The Ansa executive pointed to a conversation with a Jamaican investment bank which takes equity positions with firms that are not quite ready to list but have the potential to go public with the right guidance. Several private companies take preliminary stakes in private companies before they go public on the Jamaica Stock Exchange (JSE).

The JSE Junior Market has allowed smaller firms to expand by raising equity capital with a tax incentive to support this growth process. Over $20 billion has been raised in fresh equity capital while some owners were able to partially monetise their interest at listing.

The growth of some companies on this market enabled some founders to exit or hand over management to talent brought in near their listing. Caribbean Producers (Jamaica) Limited, Key Insurance Company Limited, Caribbean Flavours and Fragrances Limited and Dolphin Cove Limited are examples of Junior Market firms which were bought by larger firms and enabled founders to effectively retire from management while maintaining board rights.

Central Bank of Trinidad & Tobago Governor Larry Howai even commented on the Trinidad & Tobago Stock Exchange (TTSE) possibly looking at the JSE’s current development of its Micro Market for Trinidad’s small enterprises. The TTSE SME (small and medium enterprise) Market was formed in 2012, three years after the JSE Junior Market. However, whereas the JSE Junior Market has had 56 companies list since 2009 with 48 remaining, the TTSE SME market has only had four listings. The listing of Eric Solis Marketing Limited and Medcorp Limited over the last two years represented the first initial public offerings to be fully subscribed.

“We appreciate the incentives around listing, but without the bridge, those incentives won’t be enough. We need incentives around fund creation, private equity and venture firms, market makers and liquidity and incentives across the ecosystem if we want that final crossing of the bridge to the investors, high net worth individuals,” Jeffers noted.

Jeffers presentation also stated, “From Wall Street to Kingston – same lesson. Liquidity follows confidence, and confidence follows vision.” The executive highlighted that when private equity, credit and markets connection, succession becomes a strategy for firms and not a matter of survival.