Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses


Shareholder Engagement

Performance Measurement Planning & Strategy

The Green Jacket Guide to Family Business Surveys

What Can We Learn from the Masters?

It is that time of year. The azaleas are blooming at Augusta National Golf Club and nearly one hundred golfers are gearing up for their shot at a green jacket in the 88th Masters Tournament.

What the Masters has developed in terms of interest and legacy lies in the unique traditions as well as the initiatives taken on by the Masters Tournament Foundation. The Masters Tournament Foundation’s primary purpose is to support, develop, and globally expand the game of golf through clear messaging, marketing, and communications across generations of golfers. Their commitment to creating a more accessible and welcoming golf community is critical to the longevity of the sport itself.

There is no tournament in all of sports more desirable to attend than the Masters. From the iconic pimento cheese sandwich and Azalea cocktail to the 9-hole Wednesday Par-3 tournament, it is truly one-of-a-kind. Similarly, family businesses are unique with traditions of their own that drive shareholder engagement. A shareholder base that is involved and passionate is a critical factor in building a sustainable and prosperous family business. But as family business directors know…

Talking Money with the Next Gen

A recent Wall Street Journal article on the relationship between younger adults and traditional financial institutions is potentially illuminating for family business leaders.  Millennial and Gen Z attitudes toward money and financial institutions suggest that family businesses would be well-served to re-think their traditional financial communication strategies, adapting communication styles to engage next-gen family members effectively and explore innovative approaches for financial education and information sharing.

Capital Budgeting Capital Structure Planning & Strategy

Navigating the Buffet of Investment Options

A Guide for Family Businesses

This week’s blog centers around the challenges of asset allocation and investment decisions for family businesses, touching upon the importance of understanding a family’s appetite for risk and growth. We explore how the meaning assigned to the family business influences investment choices options and the necessity of balancing risk and expected returns. While there may not be a perfect answer for deciding how to invest, reevaluating what your family business needs and what it means to you will help you decide more wisely.

Capital Structure Dividend Policy

Who Eats First, the Family or the Family Business?

As Thanksgiving approaches, it reminds us of the unique challenges family business directors face in balancing what the family needs with the needs of the family business. A clear understanding of what the business means to the family is essential if decisions about dividend policy and capital allocation are to be made in a coordinated manner. This week’s post emphasizes how the meaning of your family business can help your family business directors decide who eats first — the family or the family business — this Thanksgiving.

You Can’t Spend the Same Dollar Twice

In the world of family-run businesses, the task of capital allocation poses unique challenges, especially with a diverse shareholder base that includes family members with varying financial needs. While some depend heavily on dividends to fund their lifestyle, others focus more on long-term capital appreciation. This article delves into how successful family businesses strike a crucial balance between fueling business growth and meeting shareholders’ liquidity needs, exploring the tough decisions that can make or break both family harmony and business success.

Five Reasons to Conduct a Shareholder Survey

New Video Released on Family Business On Demand Resource Center

In this video, Atticus Frank breaks down the top five reasons why your family business should consider conducting a shareholder survey. He emphasizes how these surveys can provide critical insights into shareholder perspectives, facilitate informed business decisions, and enhance communication among family members involved in the business. From uncovering deeply held views to promoting educated and engaged shareholders, the video offers valuable guidance for multi-generational family businesses looking to align interests and build trust.

Capital Budgeting Planning & Strategy

Lessons from the Oracle of Omaha

Warren Buffett is regarded as one of the world’s preeminent investors and most shrewd businessmen. Buffett and his partner, Charlie Munger recently drew thousands to Berkshire Hathaway’s annual meeting in Omaha. Buffett’s 2022 shareholder letter analyzes the company’s strategy, performance, and vision for the company going forward. This year’s letter provides several lessons for investors and family businesses alike. 

Planning & Strategy Special Topics

A Lifelong Succession Plan

Lessons from the Arnault Family

Bernard Arnault, founder of LVMH and the world’s wealthiest person, is meticulously planning the future of his luxury empire. Through a blend of creativity and pragmatism, Arnault has built LVMH into a global powerhouse while maintaining its status as a family business. Learn how the “Wolf in Cashmere” has prepared his children for leadership roles, and the Arnault family’s approach to long-term planning, stewardship, and collaboration.

Planning & Strategy Special Topics

Corporate Finance in 5 Minutes

New Video Released on Family Business On Demand Resource Center

Looking to unlock the secrets of corporate finance in just 5 minutes? This concise and engaging video will demystify the world of finance, providing you with an essential understanding of key concepts and strategies. Perfect for aspiring business leaders, entrepreneurs, or anyone looking to expand their knowledge, this video will give you the background you need to understand financial business decisions made by your company’s board and directors.

Special Topics

The New 3 Circles of Family Business and How to Be a Good Owner

Recap of the Transitions 2023 Conference

Mercer Capital sponsored and attended last week’s Transitions conference, where enterprising families came together to discuss the most critical topics for family business success. This year’s event revolved around the “3 New Circles” – engagement, succession, and governance – and tackled the essential questions family business leaders need to address. In addition, our breakout session, How to Be a Good Owner, presented 5 questions associated with developing good owners for your family business. How would you answer these questions?

Should You Conduct a Shareholder Survey?

Five Reasons Why It's a Good Idea

While private companies aren’t provided the constant, real-time feedback in terms of shareholder value afforded to public companies, ensuring that board, management, and shareholder incentives and preferences in privately held businesses are aligned is one step towards potentially maximizing shareholder value.  A shareholder survey can provide feedback to boards and management teams to avoid situations like the one Salesforce is currently facing, which finds itself amidst a potential shareholder-driven board takeover.  Since private company managers know precisely who their shareholders are, shouldn’t the characteristics and preferences of these shareholders be considered in the corporate decision-making process?  Absent these considerations, any attempts to “maximize shareholder value” are almost always destined to fail.  This week’s post outlines a few reasons why boards and management teams should consider a shareholder survey as part of their strategy to keep the incentives of all a company’s stakeholders aligned.   

Dividend Policy Planning & Strategy

Double Down or Cash Out: The Reinvestment or Distribution Decision

I recently got back from the AICPA’s Forensic and Valuation Services conference in Las Vegas.  While I came back richer in experience and CPE credit, the green felt of the blackjack table was less kind to my wallet. Matching your family shareholders’ growth objectives with their relative risk tolerance is a key directive for family business directors and one that is tied directly to what your family business means to you.  We highlight two corollary questions relating to growth, risk, and business meaning: investing decisions and distribution policy.

Planning & Strategy

Stock Buybacks and Family Businesses

Stock buybacks were in the news last week as the newly-passed Inflation Reduction Act includes a provision levying a 1% excise tax on share repurchases by public companies. As we’ve noted in previous posts, we question Congress’s grasp of the basic economics of a stock buyback, but Congress is not our focus today. 

Privately held family businesses are exempt from the tax, but directors need to understand the real economics of stock buybacks (or, in the case of family businesses, shareholder redemptions).

Shareholder Liquidity

Is Redemption a Four-Letter Word?

As recently noted in the Wall Street Journal, large public companies are announcing share repurchase programs at a record pace.  Like many issues, what is straightforward for public companies becomes a bit more complicated for family businesses.  Two factors in particular increase the degree of difficulty for family businesses.  First, the motivation for redemptions can be complicated by personal relationships.  Second, price is not a given as it is for public companies. We discuss both of these in this week’s post.

Capital Structure

Breaking Up Is(n’t) Hard to Do

Kicking off with the inspired lyrics, “Down dooby doo down down,” Neil Sedaka assured legions of teenage girls in 1962 that “Breaking Up Is Hard to Do.”  Sixty years later, the actions of the Follett family are telling family business directors that maybe breaking up is not so hard after all. In this week’s post, we explore the question “Why do different businesses sometimes need different owners?” by examining the Follet family’s recent sale of each of its three operating divisions to a different buyer.

M&A Special Topics

Family Business Purpose and Transactions

In this post, we offer a unique perspective from Atticus Frank, CFA who 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. This post focuses on the wisdom, or lack thereof, of transactions. M&A decisions shouldn’t be undertaken without understanding the meaning of the family business to the family (Is the family business a growth engine, a store of value, a wealth accumulation vehicle, or a lifestyle vehicle). Atticus tackles the topic with a story about his family business.

Special Topics Valuation

The Economics of Family Shareholder Redemptions

Regardless of the reason, significant shareholder redemptions are among the least understood corporate transactions.  In this week’s post, we consider the economics of family shareholder redemptions from three perspectives: the selling shareholder, the family business, and the remaining shareholders.

Planning & Strategy

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.

What Should Your Family Shareholders Know?

When it comes to financial matters, family business directors need to treat family shareholders as, well, shareholders.  One of the ironies of family business is the generally unspoken assumption that family shareholders are not entitled to adequate financial disclosure and transparency.  In other words, family shareholders are often entrusted with far less information than stockholders in public companies.  Whatever benefits such secrecy generates are very quickly overwhelmed by the suspicion, distrust, and discontent that naturally develops when communication fails. Positive engagement is enhanced when family shareholders receive regular communication under five primary headings which are discussed in this week’s post.

How to Communicate Financial Results to Family Shareholders (Part 3)

This week, we conclude our series of posts on communicating financial results to family shareholders. Having focused on telling the story of the family business through the balance sheet and income statement, we turn our attention this week to the statement of cash flows.

How to Communicate Financial Results to Family Shareholders (Part 2)

Everyone agrees that communication promotes positive shareholder engagement, but what does it look like to communicate financial results effectively?  In this series of posts, we offer practical suggestions for presenting key financial data in ways that family shareholders find useful.  In the last post, we focused on the balance sheet; this week, we turn our attention to the income statement.

How to Communicate Financial Results to Family Shareholders (Part 1)

Everyone agrees that communication promotes positive shareholder engagement, but what does it look like to communicate financial results effectively?  In this series of posts, we offer practical suggestions for presenting key financial data in ways that family shareholders find useful.  We start in this post with the balance sheet.

Consulting Services

Family Business Advisory Services

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