Category

Planning & Strategy

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June 24, 2025 M&A

How to Sell Your Family Business

Selling a business is a three-step process. In reality, each of the phases overlaps to some degree, making the process more of a continuum than a finite set of procedures. A turnkey, orderly process typically requires four to six months.  Ultimately, the collective team goal as a family business is to win the race, whether it be at the pace of the hare or the tortoise. In this week’s post, we take a deeper dive into those three phases and what that may look like for you and your family business when the time comes.

June 17, 2025 Current Events Special Topics

Review of Key Economic Indicators for Family Businesses

As we approach the middle of the year, uncertainty in the U.S. economy remains elevated, making this a good time for family businesses to return to the fundamentals and review key macroeconomic indicators from the first quarter of 2025 and into the second quarter. This week’s post provides a brief look at these trends and their implications, as well as some key risks in the U.S. economy to stay aware of through the balance of 2025. 

June 10, 2025 Shareholder Engagement

The Quest for Shareholder Alignment

At their best, multi-generation family businesses foster superior outcomes for shareholders, employees, customers, suppliers, and the communities in which they operate. Those are powerful incentives for maintaining family control of businesses across generations and through decades. Yet this remains the exception rather than the rule. Why? Enterprising family businesses that don’t have shareholder alignment around key issues cannot expect to last.

In this week’s post, we identify three principal financial questions around which shareholder alignment is essential for enterprising families.

June 3, 2025 Current Events

Value Amidst Uncertainty

How Will Your Family Business Fare If a Recession Sets In?

The uncertain macroeconomic environment is prompting corporate managers to consider how a recession would influence their businesses. So, now is a good time to highlight this theme and for family business directors to consider the same. How will your family business fare if a recession sets in, and how are expectations affecting the value of your family business today? When discussing value, we find it helpful to group expectations into three primary categories: cash flow, risk and return, and growth.

April 22, 2025 Shareholder Engagement

Next Gen Up

The transition to the next generation has been one of the main impediments to family businesses trying to establish a multigenerational enterprise. For many family businesses, this transition can be rocky (and often unsuccessful) due to the next generation’s lack of exposure to the business and last-minute succession planning. As more members of the next generation express interest in the family business, proactive succession planning and next generation engagement will be more important than ever to keep them involved and prepare them for the transition to come.

April 15, 2025 Capital Budgeting

Capital Budgeting and the Meaning of Your Family Business

As family businesses look into capital projects, they often utilize quantitative corporate finance tools, including net present value analysis, internal rate of return, and other traditional analyses. While these tools are informative when evaluating the feasibility of various capital projects, they are not quite as helpful in determining “what” and “how” to decide for your family business.

Before deciding on a capital project, family business directors must determine if the project is a more suitable use of family capital than alternative projects.

Knowing what your family business means can give you a leg up in evaluating these questions effectively and making the most appropriate capital budgeting decisions for your family business.

April 7, 2025 Shareholder Engagement Special Topics

The Patience to Prevail, Revisited

This week kicks off a time of economic uncertainty, with global financial markets in turmoil stemming from proposed retaliatory tariffs by the United States on effectively the rest of the world. Simultaneously, golf’s first major of 2025, the Masters, is poised to begin at Augusta National. While the Masters presents a radically different set of challenges from those presented in the Open Championship, the underlying themes and skillsets required to prevail remain the same and are just as applicable to family businesses facing challenges in times of uncertainty. With that in mind, we turn to some key thoughts for family business owners and directors to consider during these tumultuous days.    

March 18, 2025 Capital Budgeting Dividend Policy M&A Special Topics Valuation

Crown Castle’s Lessons for Family Businesses

Last week’s news that the publicly traded REIT Crown Castle (ticker: CCI) had agreed to divest its Fiber segment was a bit of a perfect storm of the issues we focus on here at Family Business Director: capital allocation and strategy, return on invested capital, valuation, and dividend policy. After years of underperformance and stagnating dividends, Crown announced a “strategic review” of its fiber business in December 2023, which culminated in Thursday’s announcement that CCI’s fiber segment would be sold to two buyers for an aggregate purchase price of $8.5 billion. In this week’s post, we review how Crown Castle’s divestiture of its Fiber segment highlights the need for an integrated framework for family business directors to evaluate and monitor the key strategic finance decisions that influence family shareholder returns for the years and decades to come.

March 12, 2025 Valuation

Why the Value of Your Family Business Matters

In last week’s edition of the Family Business Director, we reviewed six valuation principles for family business directors to keep in mind when developing valuation estimates. As family business directors, it is important to understand not just the “how” of maintaining an accurate estimate of the value of your family business but also the “why.” In this week’s post, we have compiled a list of reasons why it is essential for both family shareholders and family business directors to know what the family business is worth (even if the family has no intention of selling).

February 24, 2025 Special Topics

The Most Efficient Way to Increase the Value of Your Family Business

In last week’s post, we reviewed what EBITDA is and why not all EBITDA is created equal. In case you missed it, we ended that post with the following statement: “…improving EBITDA margins can have a multiplicative impact on your family business’s value by both providing more EBITDA and justifying a higher multiple.” So, is it really true that a higher EBITDA margin will also bring a higher multiple, or were we just getting carried away with our own thesis? For this week’s post, we pull some market data to test our assertion.

February 4, 2025 Special Topics

Tariff Talk and Adaptive Forecasting

How Family Business Directors Can Stay Ahead of Unpredictable Times

Over the weekend, President Donald Trump signed an executive order that imposed an additional 25% tariff on Canadian and Mexican imports and an additional 10% tariff on imports from China. As the socio-political atmosphere is continuously changing, it is critical for family business directors to keep a pulse on current developments and understand the different implications that may impact or change their industry moving forward. Maintaining an adaptive forecast is one of the best practices for being able to pivot during unpredictable times. As family business managers and directors re-evaluate their projections, we revisit some of the mental biases that can potentially skew forecasts.

January 27, 2025 Special Topics

A New Approach for Business Succession Planning

Family Business Director attended the 59th Annual Heckerling Institute on Estate Planning earlier this month. In one of the standout sessions, we reviewed purpose trusts and how companies like Patagonia are employing them for succession planning. Even if your family business is unlikely to follow suit, Patagonia’s novel business succession strategy provides important lessons and reminders for family directors. Your family business may not have a purpose as lofty as “protecting the planet,” but you and your shareholders will benefit if the purpose is clearly articulated, protected by thoughtful governance structures, and visible through disciplined and transparent reporting.

January 14, 2025 Capital Budgeting

Three Considerations for Capital Projects

Capital budgeting tools are ideal for answering the question: Is the proposed capital project financially feasible? Too often, however, we see these tools being used to answer what seems to be a related question, but one that the tools are simply not designed to answer: Should we undertake the proposed capital project? The first question opens the door to the second, but the tools of capital budgeting — no matter how sophisticated or quantitatively precise — cannot answer the second. To answer the second question, family business directors need to consider three qualitative questions identified in this post.

January 8, 2025

For the Love of the Game?

What Can the San Diego Padres Teach Us About Succession Planning?

What happens when family dynamics collide with billion-dollar stakes? The unfolding legal battle over control of the San Diego Padres serves as a reminder of the importance of clear succession planning. Whether your family business is a sports franchise or something closer to home, having a plan in place can mean the difference between harmony and heartbreak. Here’s what you need to know to safeguard your family business.

December 16, 2024 Capital Structure Shareholder Liquidity

The Rise of Staying Private

Shareholder Liquidity Strategies for Family Businesses

Cash-strapped early-stage companies have long relied on equity-based compensation to attract, motivate, and retain employees. But for a variety of reasons, the IPO is no longer the goal line for founders, many of whom are now content to remain private far longer than previously expected. While founders may be content with their illiquid billions, most employee-shareholders want to convert at least some of their illiquid thousands to spendable cash. Family businesses that identify creative strategies for satisfying shareholder liquidity preferences are less likely to fall victim to shareholder discontent that can derail the larger family’s desire to remain independent and private. While not providing a perfect roadmap, strategies devised by early-stage companies for satisfying the liquidity needs of their employee-shareholders may provide some timely inspiration for family business directors.

December 10, 2024 Taxes

Nvidia’s Jensen Huang Has an Estate Plan — Do You?

It’s Never Too Early for Family Business Directors to Establish an Estate Plan

Jensen Huang, the chief executive officer of Nvidia, and his family are on track to save north of $8 billion in estate and capital gains taxes. So, how has the tenth-wealthiest person in America managed to protect his wealth from the 40% estate tax? He has an estate plan. As a family business owner, it is never too early to establish or review your estate plan. While there are things that will certainly change over time, taking the pulse on your estate plans can have a major impact on the volume of wealth you pass to your heirs.

December 4, 2024

Is Your Family Business READY for 2025?

Family business owners don’t stay on top by having all the answers but by having the ability to ask the right questions. A natural question our family business clients want to know is what their business is worth today. However, an even better question asked by many of them is what they can do today to make their family business more valuable tomorrow. While the specifics of value creation are unique to each business, we like to use the READY framework coined by Chris Mercer to help our clients identify pathways for creating value. So, before the last-minute Christmas shopping becomes the main priority, we dive into his framework to ask whether your family business is READY for 2025.

November 25, 2024 Capital Budgeting Special Topics

Thanksgiving Resources for Family Business Directors

Over the years, we have used Thanksgiving as a time to remind family business directors that family is indeed the most important part of the family business. In this week’s post, we share some helpful resources before you sit down to eat some turkey with the family this Thursday. Happy Thanksgiving!

November 11, 2024 Capital Budgeting Capital Structure

A Framework for Ownership Strategy – Part II

In our last post, we introduced a simple yet effective framework for developing and managing an ownership strategy. We follow up with some further thoughts on the framework as we look at the implications of the various combinations of the three points of the framework below. Thinking about the combinations of growth, liquidity, and control can allow family business owners to further fine-tune an ownership strategy in that it forces ownership groups to consider the benefits and tradeoffs that come with developing a strategy. We examine these tradeoffs and benefits in this week’s post.   

October 28, 2024 Capital Budgeting Capital Structure

A Framework for Ownership Strategy – Part I

We recently attended a family business symposium where owners, board members, and consultants gathered to share strategies and insights. During one of the presentations, we saw a graphic that piqued our interest. It was a simple triangle that provides a framework for developing and managing an ownership strategy in a privately held family business. We offer some thoughts on developing a strategy through the lens of the graphic in this week’s post. 

October 22, 2024 Special Topics

ROIC for Family Businesses in 5 Minutes

Revenue growth and profitability are critical measures for the health of any family business, but by themselves, they tell only half of the story. As a family business director, you need the whole story. We’re not aware if Paul Harvey was a financial analyst, but if he were, we suspect his favorite performance metric would have been return on invested capital (ROIC), because it tells you the Rest of the Story.

October 16, 2024 Shareholder Engagement

The Boar’s Head Family: Why Worry About Succession Planning?

Since 1905, Boar’s Head has built a multigenerational family enterprise selling deli meats, cheeses, and other delicious sundries. In the last several decades, the company has publicly handled various product contamination and recall situations while simultaneously dealing with internal ownership conflicts and legal battles behind closed doors. It is hard to imagine the founders of Boar’s Head envisioned this sort of conflict-ridden path for their family business. While avoiding shareholder conflict is never guaranteed, family business directors can add an additional layer of protection to their family legacy and long-term wealth through focused succession planning. In this week’s post, we address a few things to consider when developing your family business succession plan.  

October 8, 2024 Special Topics

Dispatch from the Fed

Fed Chair Jerome Powell addressed the National Association of Business Economists conference in Nashville last week, and we — despite not being trained economists — were on hand.  In this week’s post, we provide a brief summary of our impressions and a few thoughts for family business directors.

September 23, 2024 Valuation

Is Your Buy-Sell Agreement a Ticking Time Bomb?

With the release of Chris Mercer’s new book, we’ve got buy-sell agreements top of mind, and you should, too. 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. In this week’s post we revisit a blog where we talk to Chris and ask, “Is there a ticking time bomb lurking in your family business?”