Corporate Finance & Planning Insights for Multi-Generational Family Businesses
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?
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.
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.
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.
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.
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.
The intersection of family and business generates a unique set of questions for family business directors. We’ve culled through our years of experience working with family businesses of every shape and size to identify the questions that are most likely to trigger sleepless nights for directors. Excerpted from our recent book, The 12 Questions That Keep Family Business Directors Awake at Night, we address this week the question, “Should We Diversify?”
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.
Family business directors will make plenty of difficult decisions in 2021, and many of those decisions will require assessing the value of the company’s shares, a particular business segment, or a potential acquisition target. What should you and your fellow directors know about valuation? In our experience, there are six basic valuation principles that can guide directors as they make tough valuation-related decisions in the coming year.
In this week’s post, we conclude our series on taking a year-end strategic inventory in your family business. Family business directors and managers need to think like a chess player when thinking about different business units within the company. What are they capable of individually, and how do they work together?
