Family Business Director

December 16, 2024 Capital Structure Planning & Strategy Shareholder Liquidity

The Rise of Staying Private

Shareholder Liquidity Strategies for Family Businesses

Cash-strapped early-stage companies have long relied on equity-based compensation to attract, motivate, and retain employees. But for a variety of reasons, the IPO is no longer the goal line for founders, many of whom are now content to remain private far longer than previously expected. While founders may be content with their illiquid billions, most employee-shareholders want to convert at least some of their illiquid thousands to spendable cash. Family businesses that identify creative strategies for satisfying shareholder liquidity preferences are less likely to fall victim to shareholder discontent that can derail the larger family’s desire to remain independent and private. While not providing a perfect roadmap, strategies devised by early-stage companies for satisfying the liquidity needs of their employee-shareholders may provide some timely inspiration for family business directors.

December 10, 2024 Planning & Strategy Taxes

Nvidia’s Jensen Huang Has an Estate Plan — Do You?

It’s Never Too Early for Family Business Directors to Establish an Estate Plan

Jensen Huang, the chief executive officer of Nvidia, and his family are on track to save north of $8 billion in estate and capital gains taxes. So, how has the tenth-wealthiest person in America managed to protect his wealth from the 40% estate tax? He has an estate plan. As a family business owner, it is never too early to establish or review your estate plan. While there are things that will certainly change over time, taking the pulse on your estate plans can have a major impact on the volume of wealth you pass to your heirs.

December 4, 2024 Planning & Strategy

Is Your Family Business READY for 2025?

Family business owners don’t stay on top by having all the answers but by having the ability to ask the right questions. A natural question our family business clients want to know is what their business is worth today. However, an even better question asked by many of them is what they can do today to make their family business more valuable tomorrow. While the specifics of value creation are unique to each business, we like to use the READY framework coined by Chris Mercer to help our clients identify pathways for creating value. So, before the last-minute Christmas shopping becomes the main priority, we dive into his framework to ask whether your family business is READY for 2025.

November 25, 2024 Capital Budgeting Planning & Strategy Special Topics

Thanksgiving Resources for Family Business Directors

Over the years, we have used Thanksgiving as a time to remind family business directors that family is indeed the most important part of the family business. In this week’s post, we share some helpful resources before you sit down to eat some turkey with the family this Thursday. Happy Thanksgiving!

November 20, 2024 Capital Budgeting Dividend Policy

Where Do Dividends Come From?

Among our family business clients, the issue of shareholder liquidity is always top of mind, and is occasionally a source of confusion among shareholders, managers, and directors. Large or small, regular or “special” dividends paid to family shareholders can really only come from five places. In this week’s post, we attempt to bring some clarity to the question of where dividends come from. 

November 11, 2024 Capital Budgeting Capital Structure Planning & Strategy

A Framework for Ownership Strategy – Part II

In our last post, we introduced a simple yet effective framework for developing and managing an ownership strategy. We follow up with some further thoughts on the framework as we look at the implications of the various combinations of the three points of the framework below. Thinking about the combinations of growth, liquidity, and control can allow family business owners to further fine-tune an ownership strategy in that it forces ownership groups to consider the benefits and tradeoffs that come with developing a strategy. We examine these tradeoffs and benefits in this week’s post.   

October 28, 2024 Capital Budgeting Capital Structure Planning & Strategy

A Framework for Ownership Strategy – Part I

We recently attended a family business symposium where owners, board members, and consultants gathered to share strategies and insights. During one of the presentations, we saw a graphic that piqued our interest. It was a simple triangle that provides a framework for developing and managing an ownership strategy in a privately held family business. We offer some thoughts on developing a strategy through the lens of the graphic in this week’s post. 

October 22, 2024 Planning & Strategy Special Topics

ROIC for Family Businesses in 5 Minutes

Revenue growth and profitability are critical measures for the health of any family business, but by themselves, they tell only half of the story. As a family business director, you need the whole story. We’re not aware if Paul Harvey was a financial analyst, but if he were, we suspect his favorite performance metric would have been return on invested capital (ROIC), because it tells you the Rest of the Story.

October 16, 2024 Planning & Strategy Shareholder Engagement

The Boar’s Head Family: Why Worry About Succession Planning?

Since 1905, Boar’s Head has built a multigenerational family enterprise selling deli meats, cheeses, and other delicious sundries. In the last several decades, the company has publicly handled various product contamination and recall situations while simultaneously dealing with internal ownership conflicts and legal battles behind closed doors. It is hard to imagine the founders of Boar’s Head envisioned this sort of conflict-ridden path for their family business. While avoiding shareholder conflict is never guaranteed, family business directors can add an additional layer of protection to their family legacy and long-term wealth through focused succession planning. In this week’s post, we address a few things to consider when developing your family business succession plan.  

October 8, 2024 Planning & Strategy Special Topics

Dispatch from the Fed

Fed Chair Jerome Powell addressed the National Association of Business Economists conference in Nashville last week, and we — despite not being trained economists — were on hand.  In this week’s post, we provide a brief summary of our impressions and a few thoughts for family business directors.