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Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

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Special Topics

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.

Taxes

A 2021 Estate Planning Reader

While we are not political prognosticators, the recent Senate runoff results appear to have given new life to the Biden Administration’s tax policy goals. Numerous publications have written about the Biden Administration’s tax plan and do not want to duplicate them here. However, we want to take the opportunity to highlight other thought leaders we are reading and what family business owners should be thinking about given recent political developments.

The Buyer You Might Be Overlooking

Considering the Role of an ESOP in Your Family Business

One obstacle many families face when it comes to selling the family business is the potential loss of identity, culture, and jobs that such transactions often leave in their wake. A recent article, however, in the New York Times highlighted an option available to family shareholders: selling the family business to the employees.  In this post, we highlight three potential benefits and drawbacks to ESOP transactions for family shareholders.

Bones of Contention

The Complicated Dynamics of Family Redemptions

Earlier this month, Christie’s auctioned off a 40-foot long T-Rex named Stan for $32 million. That’s remarkable enough, but our interest in the story was piqued upon learning why and how Stan was sold. Your family business probably doesn’t own a T-Rex, but the potential need to redeem a family shareholder still exists. In this week’s post, we explore the potential outcomes from major shareholder redemptions, and help directors be ready when the need for a redemption arises.

COVID-19 Coverage

Family-Owned Real Estate in the Aftermath of COVID-19

Accumulating real estate seems to be a natural strategy for many family business owners. After all, real estate is generally assumed to be less risky than the operating business of the family. Further, so long as the properties have a reasonable range of alternative future uses, the returns to the real estate portfolio often have a low correlation to the returns from the operating business. However, the market data we review in this week’s posts suggests that these assumptions may not hold as well in a pandemic.

Q&A: Five Questions with Ralph Jones

From time to time, Family Business Director will interview family business leaders or experienced advisors to get their perspective on important questions common to family businesses.  In this installment, we talk with Ralph Jones, Executive Chairman of Jones Family of Companies.  Ralph offers great insight that we know our readers will profit from.

Planning & Strategy

The Family Office

Managing Family Wealth Since 27 BC

Educating your family about how your wealth and/or family business is managed is essential for the preservation of your family legacy. In this week’s post, we discuss family offices. Private investment office…  Family business advisor… Single-family office… The name differs and the definition varies greatly depending on whom you ask. But the concept remains the same. Wealthy families often seek assistance to manage their accumulated wealth, organize family affairs, and preserve capital for future generations.

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Key Contacts

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Travis W. Harms, CFA, CPA/ABV

(901) 322-9760

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Timothy R. Lee, ASA

(901) 322-9740

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Bryce Erickson, ASA, MRICS

(214) 468-8411

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John T. (Tripp) Crews, III, ABV

(901) 322-9735

Consulting Services

Family Business Advisory Services

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