Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses


Shareholder Engagement

Tailoring Financial Decisions to the Meaning of Your Family Business

In a previous post, we identified the four basic economic meanings that a family business can have. For some families, the business is an economic growth engine for future generations. For others, the family business is a store of value. Alternatively, the family business can be a source of wealth accumulation or a source of lifestyle for family members.

As noted, there are certain family and business characteristics that can help family members discern what meaning “fits” their circumstances best. The meaning of the family business, in turn, has implications for the dividend policy, reinvestment, and financing decisions for the family business. In this post, we examine how the meaning of the family business influences these corporate finance decisions.

Case Study: Second-Generation Shareholders Achieve Long-Term Sustainability

This case study summarizes a recent engagement in which we helped second-generation shareholders balance two objectives in setting up a dividend policy. They desired a dividend policy that would enable each shareholder to set aside a significant nest egg of liquidity independent of his or her ownership of the Company while also being reasonable for the company, given the development of outside management and the need for and opportunities for the Company to grow.

Investor Relations for Family Businesses

An Informed and Engaged Shareholder Base is a Strategic Advantage

Family Business Director was in sunny Tampa last week at the spring edition of the Transitions Conference produced by Family Business Magazine. The sessions offered fresh insights on perennial challenges around succession planning, conflict management, and communication.  But the recurring – if not underlying – theme that impressed us was the challenge of shareholder engagement. 

What Does Your Family Business Mean to Your Family?

The meaning of a family business is a function of both family and business characteristics. In turn, it influences the dividend policy, investing, and financing decisions of the company. In this week’s post, we will identify the four potential meanings and correlate family & business characteristics with those meanings.

The Financial Costs of Family Members Behaving Badly

The ongoing drama surrounding the behavior of Papa John’s founder John Schnatter has been a mainstay of the financial press over the past fifteen months. So what is the takeaway for family business directors from the Papa John’s saga? The most important lesson is this: the bad actions of family shareholders can have significant financial repercussions for the family business, and by extension, all the family shareholders.

Preventing, or At Least De-Escalating, Family Feuds

The biggest threat to the sustainability of your family business may not come from competition or evolving technologies.  It may come from the family itself.  As a family business director, you should be attuned to this risk and take the steps necessary to help prevent, or at least de-escalate such situations. In this week’s post, we suggest a few paths forward.

How to Constructively Engage with a Dissatisfied Family Shareholder

The authors of a 2018 article on the Harvard Law School Forum on Corporate Governance and Financial Regulation identify three components of an effective response by public companies to activist investors.  We think the recommendations translate well to family business boards dealing with one or more disgruntled family shareholders.

Capital Budgeting Capital Structure Dividend Policy M&A Performance Measurement 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.

Consulting Services

Family Business Advisory Services

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