Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

Capital Budgeting Capital Structure Planning & Strategy Shareholder Engagement

Navigating the Buffet of Investment Options

A Guide for Family Businesses

This week’s blog centers around the challenges of asset allocation and investment decisions for family businesses, touching upon the importance of understanding a family’s appetite for risk and growth. We explore how the meaning assigned to the family business influences investment choices options and the necessity of balancing risk and expected returns. While there may not be a perfect answer for deciding how to invest, reevaluating what your family business needs and what it means to you will help you decide more wisely.

Special Topics

Review of Key Economic Indicators for Family Businesses

In the latest economic update, the U.S. GDP showed a resilient 4.9% growth in Q3 2023, surpassing expectations and driven primarily by personal consumption and exports. However, leading indicators suggest a potential slowdown, with economists predicting reduced GDP growth in the upcoming quarters. This week’s post delves into these trends, inflation rates, and the Federal Reserve’s monetary policies, offering useful insights for family businesses.

Capital Structure Dividend Policy Shareholder Engagement

Who Eats First, the Family or the Family Business?

As Thanksgiving approaches, it reminds us of the unique challenges family business directors face in balancing what the family needs with the needs of the family business. A clear understanding of what the business means to the family is essential if decisions about dividend policy and capital allocation are to be made in a coordinated manner. This week’s post emphasizes how the meaning of your family business can help your family business directors decide who eats first — the family or the family business — this Thanksgiving.

Capital Budgeting

Capital Budgeting in 5 Minutes

New Video Released on Family Business On Demand Resource Center

Capital budgeting can’t be avoided — the only question is whether your family business has a consistent and disciplined process for evaluating potential investments or instead makes significant capital commitments in a more haphazard way. In this video, we describe the key elements of the capital budgeting cycle and identify some common potholes along the way.

Capital Structure

Decisions, Decisions: 3 Questions to Start Thinking About Capital Structure

The ongoing economic uncertainty has prompted a noticeable shift from cash flow-based loans to asset-based loans, as companies navigate the complexities of debt repayment and capital structure optimization. This trend, accentuated by rising interest rates and inflation, calls for family business directors to critically assess their assets for collateral and understand their borrowing capacity in the context of risk management. This post presents key questions directors should be asking, emphasizing the nuanced balance required in capital decisions, especially when considering industry benchmarks and future financial security amidst economic disruptions.

Planning & Strategy Taxes

An $80 Billion Estate & Gift Tax Valuation Update

3 Things to Do When Selecting a Business Appraiser

The Inflation Reduction Act allocates an $80 billion budget increase for the IRS, significantly boosting enforcement capabilities, particularly targeting complex tax filings and high-dollar noncompliance. Recent data indicate a stable trend in gift and estate tax audits, but the increased focus on wealthier individuals hints at a potential shift, urging family businesses and estate planners to brace for more scrutiny. As the landscape evolves, selecting a seasoned business appraiser becomes crucial for family businesses, underscoring the importance of expertise, early involvement in tax planning, and high expectations for appraisal accuracy and thoroughness.

Dividend Policy

Should I Stay, or Should I IPO?

Birkenstock, the renowned comfort shoe brand, is poised for its initial public offering (IPO) this week, reflecting its recent surge in popularity amid the shift to casual fashion during the pandemic. However, with revenue growth slowing when adjusting for price increases, Birkenstock faces the challenge of convincing investors their sandals are more like sporty Nike or Lululemon, and not like Crocs. Although most family businesses will never go public, this post focuses on the intricate decisions that family businesses must make regarding dividend policies and capital allocation, to determine what kind of company their family business is.

Planning & Strategy Special Topics

Why ROIC Matters for Family Business Directors

New Video Released on Family Business On Demand Resource Center

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.


Fall 2023 M&A Update

Recent data indicates a decline in middle-market transaction activity and deal multiples for private companies in the second quarter of 2023, influenced by rising interest rates and economic uncertainty. However, the data also shows that there are still transaction opportunities for quality businesses coming to market.

Consulting Services

Family Business Advisory Services

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