Category

Capital Structure

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September 14, 2020

The Evolving Landscape for Family Capital

Two Developments That Will Affect Family Businesses

The rise of the family office as a source of investment capital for other businesses is the best evidence that families are comfortable looking outside the family business to generate returns on family capital. Just as liquid naturally flows to the lowest point, capital naturally flows to its highest and best use. The viscosity of family capital is high, so it may take longer to move, but it eventually will. In the context of this broader trend, we propose three things for family business directors to begin thinking about.

December 2, 2019

Why Do Family Businesses Tend to Borrow Less Money?

As recounted in the Harvard Business Review article entitled “What You Can Learn from Family Business,” an academic study of family-controlled and non-family public companies found that debt constituted 37% of the capital of family-run businesses, compared 47% for the non-family companies.  This finding is generally consistent with our experience working with family businesses of all sizes.  In this post, we consider why family-run businesses might be a bit more debt-shy than their non-family peers.

October 7, 2019

Four Questions to Ask About Debt in Your Family Business

What’s the right capital structure for your family business? We find that the best answer to that question can be found after asking these four questions about the use of debt in your family business.

June 24, 2019

A Guide to Corporate Finance Fundamentals

Part 2 | Finance Basics: Capital Structure

This post is the second of four installments from our Corporate Finance in 30 Minutes whitepaper. In this series of posts, we walk through the three key decisions of capital structure, capital budgeting, and dividend policy to assist family business directors and shareholders without a finance background to make relevant and meaningful contributions to the most consequential financial decisions all companies must make. This week, we focus on capital structure.

October 1, 2018 Capital Budgeting Dividend Policy M&A Performance Measurement Shareholder Engagement Taxes

What Keeps Family Business Directors Awake at Night?

Stewarding a multi-generation family business is a privilege that comes with certain responsibilities, and each family business faces a unique set of challenges at any given time.  For some, shareholder engagement is not currently an issue, but establishing a workable management accountability program is.  For others, dividend policy is easy, while next gen development weighs heavily. Through our family business advisory services practice, we work with successful families facing issues like these every day.

September 24, 2018 Capital Budgeting Dividend Policy M&A Performance Measurement Shareholder Engagement Shareholder Liquidity Special Topics Taxes Valuation

Launching the Family Business Director Blog

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

This is the inaugural post for our Family Business Director blog.  By way of introduction, we thought we would anticipate a few questions that you might have.