Family Business Director

January 14, 2025 Capital Budgeting Planning & Strategy

Three Considerations for Capital Projects

Capital budgeting tools are ideal for answering the question: Is the proposed capital project financially feasible? Too often, however, we see these tools being used to answer what seems to be a related question, but one that the tools are simply not designed to answer: Should we undertake the proposed capital project? The first question opens the door to the second, but the tools of capital budgeting — no matter how sophisticated or quantitatively precise — cannot answer the second. To answer the second question, family business directors need to consider three qualitative questions identified in this post.

January 8, 2025 Planning & Strategy

For the Love of the Game?

What Can the San Diego Padres Teach Us About Succession Planning?

What happens when family dynamics collide with billion-dollar stakes? The unfolding legal battle over control of the San Diego Padres serves as a reminder of the importance of clear succession planning. Whether your family business is a sports franchise or something closer to home, having a plan in place can mean the difference between harmony and heartbreak. Here’s what you need to know to safeguard your family business.

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.