Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

Category

Planning & Strategy


Taxes

Capital Gains Taxes and Family Businesses

Don’t Let the Tax Tail Wag the Family Business Dog

It was “leaked” last week that the Biden administration is planning to nearly double the federal capital gains tax rate on taxpayers earning more than $1 million from 20% to 39.6%. In states with high taxes, the combined blended rate could top 50%. This week we discuss the capital gains tax and provide some helpful reminders for family business owners.

Performance Measurement

Getting to the Top

A Peek Inside the Family Capital 750

Late last month, Family Capital released its third annual ranking of the world’s largest family businesses, the Family Capital 750.  As the name suggests, the list includes 750 global family businesses with 2019 revenue ranging from $2.7 billion to $514 billion. in this week’s post, we share what we found when we scrubbed the data.

Special Topics

Building the Future Family Business

Family Business Director is excited to be a sponsor of this week’s Transitions Spring 2021 conference produced by Family Business Magazine.  The theme for the conference is “Building the Future Family Business.”  The conference offers a wide range of sessions in support of that theme. Additionally, we are looking forward to leading a breakout session on Wednesday (12:10-12:50 EDT) on the role of diversification in the family business. 

Special Topics

Under Pressure: Managing Family Business Stress

Atticus Frank, senior financial analyst, worked in his family’s business for nearly three years prior to returning to Mercer Capital and joining the team’s Family Business Advisory Group. In this post, he writes about the stressful introduction to his family’s business and the steps he took to foster a healthy relationship with the business.

Capital Budgeting Special Topics

Five Economic Indicators for Family Businesses

Family business directors generally take the long view relative to their publicly traded counterparts, providing a reprieve to constant market updates and daily market volatility.  Successful family businesses plan for the next generation, not just the next quarter. However, family businesses cannot simply put their heads down and ignore economic trends outside their family’s industry.

Taking Stock: Thinking About the Pieces of Your Family Business

Returns, Growth & Risk

In this week’s post, we conclude our series on taking a year-end strategic inventory in your family business.  Family business directors and managers need to think like a chess player when thinking about different business units within the company.  What are they capable of individually, and how do they work together?

COVID-19 Coverage

Taking Stock: An Asset Class Checklist

Last week, we introduced a series of posts about taking a strategic inventory of the assets of your family business. As the calendar turns to December and 2020 (thankfully!) comes to an end, it is an appropriate time for family business directors and managers to take stock of just where their family business is at this stage in the pandemic. Doing so can help give needed context to discussions about where the family business should be headed.

We tend to think of a family business’s primary assets under seven broad headings. In this week’s post, we offer a checklist for directors and managers.

Taking Stock: Taking a Strategic Inventory of Your Family Business

As the year winds down, we recommend setting aside time to look beyond survival tactics and re-engage in some strategic thinking about your family business.  Much like an asset manager would review the portfolio they have constructed with their client, family business directors should review the current asset allocation in their family business.  Doing so can help uncover fresh insights and challenge conventional thinking that is due for an update.

Family Business Director’s Top Ten Questions Not to Ask at Thanksgiving Dinner

For most of us, Thanksgiving is a time to disregard normal dietary restraint in the company of extended family members that one rarely sees.  For some enterprising families, however, Thanksgiving quickly devolves from a Rockwellian family gathering to a Costanza-style airing of grievances.  So, in the holiday spirit, we offer this list of the top ten questions not to ask at Thanksgiving dinner.  If you have trouble distinguishing between the board room and the dining room, this list is for you.

Capital Structure

Managing the Family Business in an Era of Cheap Capital

For public companies, today’s almost endless supply of cheap capital (as evidenced by the proliferation of special purpose acquisition companies, or SPACs) is a boon. The low cost of capital makes it easier to justify investment opportunities financially, and investors are willing to provide capital in search of higher returns. For many family businesses, however, the era of cheap capital may not be an unqualified good.

Is There a Ticking Time Bomb Lurking in Your Family Business?

Buy-sell agreements don’t matter until they do. When written well and understood by all the parties, buy-sell agreements can minimize headaches when a family business hits one of life’s inevitable potholes. But far too many are written poorly and/or misunderstood. Directors are always eager to discuss best practices for buy-sell agreements.

Excerpted from our recent book, The 12 Questions That Keep Family Business Directors Awake at Night, we address this week the question, “Is there a ticking time bomb lurking in your family business?”

Shareholder Engagement

How to Communicate Risk to Family Shareholders

Communicating risk effectively is a challenge for all companies.  Making too much of the risk can alienate customers and erode the credibility that might be critical when a threat actually materializes.  On the other hand, insufficient risk disclosure can result in liability that threatens the company’s existence.  A recent article in the Harvard Business Review addressed this challenge in customer communications.  The authors of “The Art of Communicating Risk” offer three suggestions for communicating risk to customers more effectively.  In this post, we will review those suggestions, and think about how they might apply to communicating risk to family shareholders.

Acquisition Strategies for Family Businesses

Casting a Wider Net May Reveal Attractive Opportunities in the Downturn

As we noted in last week’s post, directors should take this economic opportunity to think more broadly about the portfolio of assets owned by their family business. Are any pieces extraneous? Are there any pieces that are missing? For family businesses that have hesitated to make acquisitions in the past, the missing pieces do not have to be big, nor do they have to be existing competitors. In this week’s post, we offer five categories of targets we think would be helpful to expand your list of potential acquisition opportunities.

COVID-19 Coverage

Planning for Post-Pandemic Life for Family Businesses

Family directors have rightly been focused on keeping their people safe and healthy, and taking the steps necessary to help their businesses survive the pandemic.  It will eventually be time to look ahead, however.  When that time comes for your family business, what will you be thinking about? 

COVID-19 Coverage Taxes

A 2020 Estate Planning Reader

Amid a Global Pandemic, It's Easy to Lose Track of Some Big Things That are Going On

In this week’s post, we have assembled some helpful resources we have come across that provide helpful insight on the estate planning opportunities and strategies available to family business owners during 2020.

COVID-19 Coverage

What Makes a Forecast Useful for a Family Business?

Family businesses devote time and resources to creating forecasts and budgets to guide resource allocation and strategy decisions. Yet, the forecasts and budgets for 2020 that many family businesses spent months creating are now worthless. So managers and directors face the task of revising and updating those forecasts amid a uniquely uncertain environment that the pandemic has caused. In this post, we provide some ideas of how to “loosen up” forecasting models to make them more useful.

Special Topics

The Family Office

Managing Family Wealth Since 27 BC

Educating your family about how your wealth and/or family business is managed is essential for the preservation of your family legacy. In this week’s post, we discuss family offices. Private investment office…  Family business advisor… Single-family office… The name differs and the definition varies greatly depending on whom you ask. But the concept remains the same. Wealthy families often seek assistance to manage their accumulated wealth, organize family affairs, and preserve capital for future generations.

When Is It Too Late to Plan?

Takeaways from Moore v. Commissioner

If the senior generation of your family business has not yet crafted their estate tax plan, today is the best day to start.  A new decision handed down from the Tax Court last week provides a timely reminder that the costs of procrastination can be very high.

COVID-19 Coverage

Looking Back to Look Forward

We are not economic forecasters, so we are not attempting to make any predictions about the coronavirus or its economic effects.  However, in an effort to provide some context for ourselves, this week we decided to go back and examine some data from the Great Recession.

Is Your Family Business Risky Enough?

Family business directors should carefully consider how to integrate the risk of the family business with the risk of the family as a whole. Like their publicly-traded brethren, it may turn out that some family businesses aren’t risky enough.

Consulting Services

Family Business Advisory Services

Mercer Capital provides financial education services and other strategic financial consulting to family businesses