Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

Special Topics

Q&A: Five Questions with Dan Hatzenbuehler

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 first installment, we talk with Dan Hatzenbuehler, the retired Chairman and CEO of E. Ritter & Company.  Dan offers great insight that we know our readers will profit from.

Special Topics

The Financial Costs of Family Members Behaving Badly

The ongoing drama surrounding the behavior of Papa John’s founder John Schnatter has been a mainstay of the financial press over the past fifteen months. So what is the takeaway for family business directors from the Papa John’s saga? The most important lesson is this: the bad actions of family shareholders can have significant financial repercussions for the family business, and by extension, all the family shareholders.

Special Topics

Basics of Financial Statement Analysis

Part 2: The Income Statement

This post is the second of four installments from our Basics of Financial Statement Analysis whitepaper.  In this series of posts, our goal is to help readers develop an understanding of the basic contours of the three principal financial statements. The balance sheet, income statement, and statement of cash flows are each indispensable components of the “story” that the financial statements tell about a company.  This week, we focus on the income statement.

FAQ

Five Reasons Your Financial Projections Are Wrong

The good news – or maybe it’s the bad news, depending on your perspective – is that overly optimistic projections are not necessarily the result of intentional errors on the part of your family business managers.  Rather, behavioral economists tell us that humans are prone to overconfidence as a result of what they refer to as cognitive biases. In this post, we address five cognitive biases contributing to overly optimistic forecasts.

Shareholder Engagement

Preventing, or At Least De-Escalating, Family Feuds

The biggest threat to the sustainability of your family business may not come from competition or evolving technologies.  It may come from the family itself.  As a family business director, you should be attuned to this risk and take the steps necessary to help prevent, or at least de-escalate such situations. In this week’s post, we suggest a few paths forward.

Special Topics

Basics of Financial Statement Analysis

Part 1: The Balance Sheet

This post is the first of four installments from our Basics of Financial Statement Analysis whitepaper.  In this series of posts, our goal is to help readers develop an understanding of the basic contours of the three principal financial statements. The balance sheet, income statement, and statement of cash flows are each indispensable components of the “story” that the financial statements tell about a company.  This week, we focus on the balance sheet.

Special Topics

Shareholder Redemptions in Family Businesses

Are They Good or Bad?

Over the weekend, the New York Times published an opinion column by Chuck Schumer and Bernie Sanders in which the senators decried the increasing prevalence of stock buybacks among the country’s largest publicly traded companies. Reading the column made us think about shareholder redemptions for family businesses. Do shareholder redemptions hurt or help family businesses?  Of course, that question does not have a simple answer.  Not all shareholder redemptions are created equal, so in this post, we’ll outline three possible redemption scenarios and identify what attributes suggest whether a given shareholder redemption will help or hurt a family business and its relevant stakeholders.

Talking to the Numbers

How Much Money Does Your Family Business Really Make?

In our last post in this series, we focused on operating income, which is a critical measure for evaluating the performance of management since it is unaffected by financing and tax decisions made by the board of directors.  Net income, on the other hand, reveals how those board-level decisions influence your family business’s earnings and ability to pay dividends.  Everyone likes to talk about EBITDA and EBIT – and those are important metrics – but only net income measures the increase in the family’s wealth from owning the business.

Consulting Services

Family Business Advisory Services

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