And Other Takeaways from the Heckerling Estate Planning Conference
We had the opportunity to attend the 57th Annual Heckerling Institute on Estate Planning, one the largest conferences for estate planning professionals. This year’s week-long conference was the first to be held in person in a few years, and the exhibit hall and education sessions were full of good information and details on the estate, gift, and tax planning fronts. We share just a few topics of conversation and tidbits we picked up from the sessions and conference last week.
As we begin to put a bow on 2022 and turn our attention to 2023, we suspect that the dreaded “R word” is on the mind of many of our readers as they contemplate the myriad challenges and obstacles their businesses will face in 2023. As a family business owner or director, now is the time to think critically about how your family business is positioned for a potential economic slowdown. This post offers a few practical steps family business owners and directors can take to ensure their business continues to thrive even if Santa brings us a recession this year.
We have traditionally advised you about what not to talk about at the Thanksgiving dinner table, but this year, we thought we would highlight a more positive family business conversation that you might want to have with your family shareholders.
With economic data for 3Q22 beginning to trickle in, we look at a few key trends that developed during the quarter. The tale of the tape in the third quarter was the same as it has been for virtually all of 2022—volatile equity markets, ongoing inflationary concerns, and rising interest rates. In this post, we provide a concise and unbiased look at some of the manifested trends.
The 2022 midterm elections are here, and, as usual, one of the most significant differences between Democrats and Republicans is tax policy. While voters are contemplating significant issues ranging from inflation, immigration, and gun control, the election outcome will also influence which tax priorities Democratic and Republican lawmakers will pursue over the next few years.
For many family business leaders we talk with, “private equity” is a four-letter word. In this post, we identify a couple of potential “pros” for private equity that family business directors should be aware of and also confirm a couple of the well-known “cons” to accepting private equity investment.
This week we welcome Nick Heinz, ASA to the Family Business Director Blog. Nick is a Senior Vice President at Mercer Capital and a member of the firm’s Transaction Advisory team. This article originally appeared as part of an ongoing series, Buy-Side Considerations, from Mercer Capital’s Transaction Advisory team and highlights key considerations for family businesses looking to engage in a merger.
Any good CFO or Controller knows what’s on their business’ balance sheet, including cash, inventory, property, and debt. But for enterprising families, it is often necessary to go one step further and ask what’s on the family’s balance sheet? It may be your great uncle’s antique car collection, a ski chalet shared by you and your family, or rare art that adorns your office. Whatever it may be, there are three things we think you should consider regarding your more esoteric family balance sheet items: valuation, diversification, and allocation.
Most family business owners desire to provide financially for their family. Due to this, one of the widespread concerns of these owners is the ability to transfer ownership of the family business to the next generation in the most tax-efficient way. In this post, we explain the importance of understanding the concept of fair market value when evaluating an estate planning strategy and some potential next steps to take to ensure the estate plan accomplishes the desired goals.
We are excited to announce the grand opening of our Family Business On Demand Resource Center. The Center is a one-stop shop for enterprising families and their advisors facing the financial challenges that are common to family business.
How to get a non-family CEO and a family ownership team on the same page regarding financial goals, dealing with a family member who needs to step down from leadership, and the turnaround story of family-owned Radio Flyer are some of what we’ve been reading about as fall approaches. In this week’s post, we share a few interesting articles you and your family board members may enjoy.
With economic data for 2Q22 trickling in, we take a look at a few key trends that developed during the quarter. Volatile equity markets, ongoing inflationary concerns, and rising interest rates drove headlines in the second quarter of the year. The information in this post provides a concise and unbiased look at some of the trends that manifested themselves during the quarter.
In this post, we discuss three simple rules that can help promote impactful and productive dialogue between parents, children, and different generations in your family business: big picture first, be transparent, and remember priorities. Having these transitional and educational conversations is essential for family businesses.
Benchmarking is a powerful tool 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 their leaders.
This blog post summarizes some of the findings in our 2022 Benchmarking Guide for Family Business Directors.
Do you know how much cash is on your family business balance sheet? How about receivable health and your debt position? Reading this blog, you likely answered “yes” to these questions.
Do you also know how much your family business is worth?
If you answered “Yes,” you are in a select company as 98% of small businesses polled by M&T Bank over the past two years didn’t know the value of their businesses. Knowing and understanding the value of your family business is essential to making critical decisions around dividends, capital structure, or capital budgeting that have long-term effects on your family business.
Travis Harms, who leads Mercer Capital’s Family Business Advisory Services Group, spoke to CNBC recently on the importance of valuation and understanding the value of your business. This week’s Family Business Director post highlights the piece, and we hope you check it out.
Acquirers of companies can learn a valuable lesson from the same approach that pro sports teams take in evaluating players. Prior to draft night, teams have events called combines where they put prospective players through tests to more accurately assess their potential. In this scenario, the team is akin to the acquirer or investor and the player is the seller. While a player may have strong statistics in college, this may not translate to their future performance at the next level. So it’s important for the team to dig deeper and analyze thoroughly to reduce the potential for a draft bust and increase the potential for drafting a future all-star.
A similar process should take place when acquirers examine acquisition targets. Historical financial statements may provide little insight into the future growth and earnings potential for the underlying company. One way that acquirers can better assess potential targets is through a process similar to a sports combine called a Quality of Earnings Study (QoE).
We at Family Business Director hope you all had a relaxing and enjoyable Memorial Day Weekend. This week’s post is a collection of thought-provoking “summer reading” material. We hope you enjoy these pieces on a beach or by a pool, preferably while sipping a tall cool beverage. Happy reading!
Pedaling Too Close to the Sun
Think back to March 2020. Many businesses and operations saw immediate stoppages and closures with no idea when they could restart. The fitness industry was no exception. Planet Fitness, the gym operator, completely shut down its locations and its stock plummeted. Peloton Interactive saw sales surge for its at-home exercise spin-bike and its stock soar. These two businesses entered very different seasons at the onset of the COVID-19 lockdowns and slowdown. Planet Fitness was facing a sudden and bitterly cold winter, while Peloton was spinning its way into summer.
We think there are three lessons that can prevent your family business from pedaling in place: understand what season your business is in, be prepared for slow-downs, and diversify prudently. Read more in this week’s post.
In this week’s post, we take a look at a few key macroeconomic trends that developed in the, shall we say, busy, first quarter of 2022. Between volatile equity markets, mounting global geopolitical tensions, raging inflation, and increasing interest rates, a lot went on in the year’s first quarter from a macro perspective.
We hope that this blog post cuts through some of the “noise” and provides our readers with a concise and unbiased look at economic trends from the first quarter of 2022.
Who said: “Twitter has extraordinary potential. I will unlock it”?
If you answered “Elon Musk,” you’d be right. His potential acquisition of Twitter has been all over the financial press of late.
In this week’s Family Business Director post, we ask “What can your family business learn from the Elon Musk/Twitter saga”? There are at least two lessons to be learned. Read more in this week’s post.
In recent months, inflation has overtaken labor market measures as the most headline-grabbing macroeconomic indicator in the financial press. Inflation typically moves the needle more than other economic measures because of its effects not only on businesses of all sizes but also on consumers. The current inflationary environment has contributed to shifts in consumer behavior thus far in 2022, and it is important that family businesses build responses to changing consumer behavior into their budgeting and forecasting processes. In this week’s post, we take a look at key considerations family businesses should be thinking about in their response to the current inflationary environment.
The list of forecasting cliches is long (thanks, Yogi Berra!), but we were recently reminded of a good one: there are only two kinds of forecasts – lucky and wrong. That reminder came from an article by Joachim Klement 10 Rules for Forecasting.
Klement’s list is focused on macro level economic forecasting, but several of his rules apply equally well to the micro level of individual family businesses. In this post, we will consider four of Klement’s rules in the context of family businesses.
Here at Family Business Director, we are focused on the numbers of family business: measuring and assessing financial performance, establishing dividend policy, setting capital structure, making capital budgeting decisions, and structuring shareholder redemptions. All that said, we also recognize that family business leaders face many other critical challenges. So, in this week’s post, we provide a quick roundup of some of the best pieces we’ve come across recently dealing with management succession, governance, attitudes toward wealth, family relationships, board dynamics, and more.
Family business directors are often afforded a luxury that their publicly traded counterparts are not: the ability to focus on and plan for the long term rather than solely the next quarter’s earnings report. While family businesses may not have the in-house economists and research departments of the larger public, it is crucial for the management and boards of family businesses to keep tabs on the overall economic environment in which they operate, as an understanding of the metrics and trends driving or hampering growth in the economy can inform effective and relevant strategic, tactical, and operational planning and decision making aimed at maximizing long-term shareholder returns. With that, we take a look at a few of the broad trends that bore themselves out in the U.S. economy through the end of 2021 and the first months of 2022.