Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

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Special Topics


Dividend Policy

Family Business Dividend Survey Results

This summer, we partnered with Family Business Magazine to conduct our inaugural survey of dividend practices at family-owned businesses.  This week, we feature an article that we wrote for the magazine summarizing the survey results.  We hope you enjoy and gain some insights that can help you and your family evaluate your current policy and make plans for the future.

Can You Hear Me Now? Lessons from a $20 Billion Family Business Fight

The recent turmoil engulfing the Rogers family, controlling shareholders of the $20 billion Canadian wireless communications and media conglomerate Rogers Communication, piqued our interest. What can public family strife affecting the Rogers family teach us? Well, quite a bit. In this post, we summarize the family drama and provide three strategies to keep in mind to stave off harsh family infighting that can, ultimately, bleed over into your company’s ability to operate effectively.

Capital Structure

How Stable Is Your Family Business Stool?

My family and I have been out at the Broadmoor in Colorado Springs for a work conference. Since we were going to a nice resort and conference center, we decided to parlay the weekend into a family business meeting. The meaning of the family business impacts the three key legs of the family business stool: dividend policy, capital investment, and financing decisions. In this post, we detail how we thought about each of the three legs.

Planning & Strategy Taxes

Looming Estate Plan Disruptions

Are You Prepared?

Numerous changes lurk in the current reconciliation bill snaking its way through Congress and it could have major ramifications to the estate plans you worked up just a few years ago.

In this post we briefly touch on planning vehicles and structures as well as valuation tools currently being debated in the reconciliation bill and why they are important to many family business owners and advisors.

Should Your Family Consider a Family Office?

If you are in the fortunate position to be the owner of a profitable family business you might consider hiring an expert to help manage your wealth. If so, you should be familiar with two primary business models available to assist in wealth management: traditional wealth management firms and family offices.

In this post, we discuss some key differences in deciding which financial solution is best for an ultra-high net worth individual or family.

Taxes

Tax Changes Remain Murky: A(nother) Tax Update

The U.S. House Ways and Means markup of the $3.5 trillion reconciliation bill is here and we’ve discovered surprises both big and small.

In this post, we summarize some of the key proposals that you and your family board need to keep an especially close eye on.

How Long Will It Take to Sell My Family Business?

That Depends on the Type of Transaction …

In this week’s Family Business Director, Tim Lee, ASA, Managing Director of Corporate Valuation and John T. (Tripp) Crews, III, Senior Financial Analyst, discuss expectations around the timeline for your business transition or sale and summarize key points to keep in mind when driving towards an internal or external sale.

Planning & Strategy

Don’t Read This Book

Don’t read this book if you run a family business that is flush with cash, growing like a weed, regularly enjoys drama free family dinners, has their succession plan for your grandchildren in order, and do not foresee any disruption to your business over the next few generations.
Assuming the above does not describe you perfectly, the Harvard Business Review | Family Business Handbook by Josh Baron and Rob Lachenauer is a comprehensive and useful tool for anyone involved with or working in their family business.

Performance Measurement

Sanderson Farms Case Study

Cargill is one of the largest family businesses in the world. Earlier this year, we analyzed the Family Capital list of the world’s 750 largest family businesses; Cargill checked in at number 15 on that list, with annual revenue reported to be in excess of $110 billion. Cargill made headlines earlier last week for its acquisition (together with another family business, Continental Grain) of Sanderson Farms, a publicly traded poultry business (ticker: SAFM). It is not every day that family businesses acquire publicly traded companies, so the transaction is worth exploring a bit further.

The Potential Buyers of Your Family Business

An Overview of the Different Types of Buyers for Closely Held, Family Businesses

In this week’s Family Business Director, Tim Lee, ASA, Managing Director of Corporate Valuation and John T. (Tripp) Crews, III, Senior Financial Analyst, discuss internal and external exit options for you and your family business and summarize the possible buyers for your family enterprise.

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.

Consulting Services

Family Business Advisory Services

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