Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

Planning & Strategy Special Topics

Navigating Change in the Family Business

2024 Transitions Conference Recap

We’re back from Family Business Magazine’s 2024 Transitions Spring Conference, held this year in Tampa, Florida. The theme of this year’s conference was change and transition in your family business. The conference speakers and sessions struck a good balance of effectively facilitating organizational change while maintaining your family’s values and identity. We discuss three transitional forces facing you and your family business, inspired by the conversations we had at the conference.

M&A

Spring M&A Update for Family Businesses

Following up on our post from a couple of weeks ago regarding the acquisition of SRS Distribution by Home Depot, we provide a brief update on private M&A markets in this week’s post.

Although middle market transaction activity remained depressed in the fourth quarter of 2023 compared to 2022, M&A activity and multiples improved a bit compared to recent quarters. Possible Fed rate cuts, a resilient economy despite 525bps of Fed rate hikes, and ample dry powder held by PE firms to deploy may be the catalysts for a stronger rebound in 2024.

Performance Measurement Planning & Strategy Shareholder Engagement

The Green Jacket Guide to Family Business Surveys

What Can We Learn from the Masters?

It is that time of year. The azaleas are blooming at Augusta National Golf Club and nearly one hundred golfers are gearing up for their shot at a green jacket in the 88th Masters Tournament.

What the Masters has developed in terms of interest and legacy lies in the unique traditions as well as the initiatives taken on by the Masters Tournament Foundation. The Masters Tournament Foundation’s primary purpose is to support, develop, and globally expand the game of golf through clear messaging, marketing, and communications across generations of golfers. Their commitment to creating a more accessible and welcoming golf community is critical to the longevity of the sport itself.

There is no tournament in all of sports more desirable to attend than the Masters. From the iconic pimento cheese sandwich and Azalea cocktail to the 9-hole Wednesday Par-3 tournament, it is truly one-of-a-kind. Similarly, family businesses are unique with traditions of their own that drive shareholder engagement. A shareholder base that is involved and passionate is a critical factor in building a sustainable and prosperous family business. But as family business directors know…

M&A Planning & Strategy

Home Depot Announces SRS Distribution Acquisition

An M&A Case Study

The Fed’s efforts to rein in inflation from early 2022 through the middle of 2023 also reined in middle market M&A activity.  Middle market transaction data provider GF Data reported data on 269 sub-$500 million acquisitions by private equity firms in 2023, compared to 464 such deals in 2021 (a 42% decrease).  Some of those “missing” deals may never happen, but we suspect most were simply deferred, leading to more robust transaction volumes as buyers and sellers acclimate to the new “normal” interest rate environment.

Home Depot’s recent announcement that it was acquiring roofing and construction material distributor SRS Distribution may signal the return of more robust deal activity.  Even if your family business has nothing to do with construction materials, there is plenty to note in this deal.

M&A Planning & Strategy Valuation

Your Family Business Will Transact: Are You Ready?

Approximately 75% of business owners regret selling their business within the first year following the sale, according to a new report. Have you checked in on your succession plan? How does your business’s succession and exit plan stack up? We explore a new report and why planning ahead is crucial to ensuring your future business transition goes as smoothly as possible.

Planning & Strategy Special Topics Taxes

Now Could Be a Great Time to Transfer Stock to Heirs

Rising inflation and higher interest rates have significantly affected business values and the broader economy, with some industries managing to navigate the higher-rate environment while others struggle. The Federal Reserve has indicated potential rate cuts later this year, which could have widespread implications for businesses and the economy. Now is the time to explore favorable opportunities for transferring business value to future generations and consult with estate planning advisors.

M&A Planning & Strategy Special Topics

5 Reasons Sellers Need a Quality of Earnings Report

In a recovering M&A market, sellers must be prepared to present their value proposition effectively. A Quality of Earnings (QofE) report is essential for sellers to maximize their asset’s value and navigate the negotiation process with confidence. The report not only helps in presenting adjusted and future sustainable profitability but also equips sellers with crucial information for clear decision-making, fostering transparency, and ensuring a favorable transaction outcome.

Planning & Strategy Taxes

The Times They Are A-Changin’

The sunsetting provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire after 2025. Family business directors must be aware of these changes, especially the Qualified Business Income (QBI) deduction and federal gift and estate tax exemption amounts. Expiration of the QBI deduction would increase taxes for pass-through entities, while the reduction of estate tax exemptions would significantly impact family wealth planning. Proactive planning and consultation with tax professionals are essential to ensure the continued success of family businesses.

M&A Planning & Strategy

Ownership Succession and the NFL

The NFL has functioned as a family business incubator of sorts throughout its decades of existence. While other major U.S. professional sports leagues have embraced private equity ownership in recent years, the NFL has held out in favor of the family-owned model. The introduction of private equity into the league (expected at next month’s league meetings) will have far-reaching effects, both positive and negative. In this week’s post, we look at the pros and cons of private equity ownership in NFL franchises and how, like the NFL, family business owners considering private equity investment should weigh the pros and the cons before bringing PE firms into ownership groups.

Consulting Services

Family Business Advisory Services

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