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Special Topics

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May 3, 2021 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.

April 12, 2021 Shareholder Engagement Valuation

The Economics of Family Shareholder Redemptions

Regardless of the reason, significant shareholder redemptions are among the least understood corporate transactions.  In this week’s post, we consider the economics of family shareholder redemptions from three perspectives: the selling shareholder, the family business, and the remaining shareholders.

April 5, 2021

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.

March 22, 2021 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. 

March 15, 2021 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.

March 8, 2021 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.

March 1, 2021

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?

February 22, 2021 Planning & Strategy

Define Your Values: Aligning Your Family Goals with Business Objectives

How does someone align the goals of the family with their business? This post looks at a few practices I picked up in my family’s business, and ones we still practice.

February 15, 2021 Planning & Strategy

Financing Options Abound for Family Businesses in 2021

Barring a change in the economic backdrop, as uncertain as it is, the availability of debt financing for most family businesses in 2021 is good. Further, the cost of credit will be low and most likely the terms will be lenient by historical standards.

February 8, 2021

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. 

February 1, 2021

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.

January 25, 2021

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.

January 11, 2021 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.

November 9, 2020

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.

November 2, 2020

Family Business in 2020: Musings on Market Signals

How do investment returns for family businesses compare to other enterprises? Does having a female CEO make a difference in returns? In this post, we find out.

October 26, 2020

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.

June 22, 2020 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.

June 15, 2020 COVID-19 Coverage

Buy-Side M&A Opportunities in the Aftermath of the COVID-19 Pandemic

While it may be difficult to think past the day-to-day of operating in the current environment, acquisition opportunities are likely to be on the horizon over the next few years, most likely at attractive valuations for acquirers.

May 18, 2020

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.

April 27, 2020 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.

April 6, 2020 COVID-19 Coverage

A COVID-19 Family Business Reader

Over the past several weeks, we have seen a lot of great content from folks we respect and admire on leading a family business through turbulence, and thought that we would compile a sampling for the benefit of our readers this week.

March 23, 2020 COVID-19 Coverage Valuation

Coronavirus and the Value of Your Family Business

As family business leaders continue to make hard decisions in real-time against the ever-changing backdrop of the pandemic, their legal and tax advisors would do well to consider whether this is an opportune time for intra-family ownership transfers.  For many family businesses, the current economic uncertainty presents a unique, and perhaps fleeting, opportunity for more tax-efficient estate planning.

March 16, 2020 COVID-19 Coverage Planning & Strategy

Is Your Family Business Ready for a COVID-19 Recession?

The official end of the bull market for public stocks signals that Coronavirus-induced disruptions to the global economy are real and are expected to persist. The stock market tends to be the best leading economic indicator, so family business directors would do well to think about how best to position their businesses to weather the slowdown.

March 9, 2020

Notes from Transitions Spring 2020

Family Culture and Dividend Policy

Family Business Director attended the Transitions Spring 2020 conference in sunny Tampa last week. In this post, we discuss a few recurring themes from the conference.