Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

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Special Topics


Taxes

Estate Planning Changes Update

It’s been over six months since we last took inventory of where we stood in the face of tax changes (increases) affecting estate planning. While we currently have some ideas on what to expect regarding the tax policy changes, the full picture remains murky. In this post, we try to clear up some of the murkiness by sharing what we are reading, listening to, and learning regarding tax changes and other factors affecting family businesses and estate plans.

COVID-19 Coverage

5 Trends Facing Family Businesses Today

Back in the spring of this year, we discussed five broad economic indicators family businesses needed to keep their eye on. In this week’s post, we wanted to revisit those trends and see where we have come over the last four months, as well as what we are hearing from our clients on the ground.

A (Not So) Bold Prediction

The Rise of Non-Family Equity Capital in Family Businesses

In this post, we will take a quick look at the growing supply of capital seeking minority investments in family businesses, the sources of growing demand from family businesses for such investment capital, and how directors can best position their family businesses to thrive.

Customer Concentrations and the Value of Your Family Business

Does your family business have a significant customer concentration that is reducing the valuation multiple? If so, what steps are you and your fellow directors taking to mitigate this risk? In this post, we offer two strategies to mitigate the risk of customer concentration in your business.

Summer 2021 Reading

Family Business Director is off enjoying 4th of July festivities this week. For our readers that are looking for some beach reading, we thought we would direct your attention to some of our more popular posts in case you missed them the first time around.

M&A Shareholder Engagement

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.

Five Questions with Paul Hood

In this post, Travis Harms sat with Paul Hood, a recovering tax lawyer, to speak about one of the most important tasks a business owner will face: estate planning.

Crypto, Meme Stocks, NFTs and Your Family Business

Cryptocurrencies, meme stocks, and NFTs are in the news. In the post, we explore what the well-publicized market activity for cryptocurrencies, meme stocks, and NFTs suggest for the value of your family business.

Book Review: When Anything Is Possible

Over 80% of trust beneficiaries believe their trust has a negative impact on their lives. Really? That is one of the numerous counterintuitive findings presented by David C. Wells, Jr. in his new book “When Anything Is Possible: Wealth and the Art of Strategic Living.” In our family business advisory practice at Mercer Capital, we help our clients navigate the intersection of family issues and business realities. Built around the framework of wealth structure, identity, and strategy, “When Anything Is Possible” is a timely guide for business owners thinking about the role of wealth in their families.

COVID-19 Coverage

Making Sense of 2020: Part 4

History, Valuation & the Future

We’ve covered the pandemic’s affect on the operating, investing, and financing decisions made by public companies in our last three posts. This week, we conclude by examining shareholder returns.

COVID-19 Coverage

Making Sense of 2020: Part 3

Benchmarking Cash Flow From Financing Activities

In the first two parts of this series, we analyzed the operating performance and investing decisions of the companies in our benchmarking universe. This week, we examine the financing decisions of those companies and apply those observations to family businesses.

COVID-19 Coverage

Making Sense of 2020: Part I

Benchmarking Cash Flow From Operations

Here at Family Business Director, we believe in the power of benchmarking for family businesses. Done well, benchmarking provides managers and directors with valuable insight and context for evaluating the operating performance of the family business and the strategic investing and financing decisions made by the directors.

For the 2021 edition of Mercer Capital’s “Benchmarking Guide for Family Business Directors,” we have drawn data from the SEC filings of revenue-generating companies in the Russell 3000 index (excluding financial institutions, real estate companies, and utilities). From that data, the Benchmarking Guide focuses on four metrics: 1) the components of cash flow from operations, 2) investing activity, 3) financing decisions, and 4) market performance and shareholder returns.

This first post of four addresses the first metric: The components of cash flow from operations. The benchmarking data raises some critical questions for family business directors as the U.S. economy continues on the path to recovery.

Real-World Tips For Family Business Succession

What can family business directors do to ensure a successful succession plan for the next generation? In this post we offer three lessons. In our view, a B+ succession plan today is better than an A+ plan later. Starting the succession planning process now – understanding that it will evolve – should spur family business directors to actionable plans that will help everyone sleep better at night.

Planning & Strategy

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. 

Planning & Strategy

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 Planning & Strategy

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.

The Three-Legged Stool of Family Business

Our family business advisory practice is focused on three strategic financial questions that weigh on family business directors and can keep them awake at night: 1. What is the right dividend policy for our family business?, 2. What is the right family business capital structure?, and 3. What is the right asset mix for our family business?

All EBITDA Is Not Created Equal

EBITDA promotes comparability across firms by “normalizing” for structural features of how those companies are organized, financed, and assembled.  This is best seen by considering the various adjustments to net income that are made to arrive at EBITDA. 

Navigating Tough Family Business Conversations

A Family Business Journey

Getting bad business news from a third party or professional colleague often stings.  Hearing the same thing from your mother?  Well, we’ll leave that to the imagination.  Trusted third parties or intermediaries often can blunt other complex familial layers and limit the discussion to the business at hand, making tough conversations manageable.  Not easy, but manageable.

Diversification and the Family Business

The Family Business Director To-Do List

The tyranny of the urgent imposes itself on family business directors just as it does on everyone else.  In this series of posts, we offer various to-do lists for family business directors.  Each list will relate to a particular family business topic.  The items offered for consideration will not necessarily help your family business survive the next week, but instead reflect priorities for the long-term sustainability of your family business.

Consulting Services

Family Business Advisory Services

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