Family Business Director

February 28, 2023 Capital Structure M&A Planning & Strategy

Out to the Public and Back Again

The Weber Grill Case Study

A recent Wall Street Journal article highlighted the trend of newly-public companies reverting back to private ownership after a very short time in public hands.  Among the boomerang IPOs mentioned in the article was that of backyard grill maker Weber.  With the advent of grilling season, we were curious about Weber’s experience in the public markets and any lessons that family business directors might be able to draw from the tale. Among the lessons available for family business directors from the tale, we will focus on two for this post.

February 21, 2023 Planning & Strategy Special Topics

Review of Key Economic Indicators for Family Businesses

In this week’s Family Business Director post, we look at a few key macroeconomic trends that developed in the fourth quarter of 2022 and early 2023 and their impact on family businesses. In the final quarter of 2022, the effects of the Fed’s rate hiking campaign began to permeate throughout the economy, particularly in inflation readings. Still, GDP outpaced consensus estimates, and U.S. equity markets reacted positively to signs of slowing inflation in October and November.  The Fed continued to raise the benchmark rate with a 75-basis point increase in November and a 50-basis point increase in December.  This post provides a brief look at these trends. 

February 14, 2023 Planning & Strategy Special Topics

From Unfriended to Best Friends Again?

Attaining Efficiency Through Restructuring

Facebook, now known as Meta Platforms (NASDAQ: META), released fourth-quarter earnings and full-year 2022 results earlier this month.  The stock is currently trading at its highest level in the last six months, albeit still at relatively low implied valuation multiples. This comes after a notably tough year for Facebook, as its stock fell 64% last year due to heightened competition from TikTok and a slump in the digital ad market.

So, what changed?  The two main changes for this significant increase are cost cuts and the announcement of a $40 billion increase in their share repurchase authorization.  While Meta previously taught us about long-term planning and plant/harvest decisions, Facebook’s belt-tightening and share repurchase plan bring up another few lessons on forecasting and share repurchasing, which we revisit in this blog.

February 7, 2023 Planning & Strategy Valuation

6 Valuation Principles You Should Know

New Video Released on Family Business On Demand Resource Center

Family business directors and shareholders do not need to be valuation experts.  However, there are six basic valuation principles that can help directors and shareholders make better long-term financial decisions for their family businesses.  In this video, we identify and explain these six principles, which are great additions to your family business toolbox.

February 1, 2023 Shareholder Engagement

Should You Conduct a Shareholder Survey?

Five Reasons Why It's a Good Idea

While private companies aren’t provided the constant, real-time feedback in terms of shareholder value afforded to public companies, ensuring that board, management, and shareholder incentives and preferences in privately held businesses are aligned is one step towards potentially maximizing shareholder value.  A shareholder survey can provide feedback to boards and management teams to avoid situations like the one Salesforce is currently facing, which finds itself amidst a potential shareholder-driven board takeover.  Since private company managers know precisely who their shareholders are, shouldn’t the characteristics and preferences of these shareholders be considered in the corporate decision-making process?  Absent these considerations, any attempts to “maximize shareholder value” are almost always destined to fail.  This week’s post outlines a few reasons why boards and management teams should consider a shareholder survey as part of their strategy to keep the incentives of all a company’s stakeholders aligned.   

January 23, 2023 Planning & Strategy

The 84 Lumber King

Succession Planning and How to Find Your Next Leader

84 Lumber is a family-owned private company. It operates more than 260 stores, component manufacturing plants, custom door shops, custom millwork shops, and engineered wood product centers in 35 states. Joseph A. Hardy III, the founder of 84 Lumber, lived an interesting and flamboyant life. The business is run now by Hardy’s youngest daughter, Maggie Hardy, who serves as president. A Wall Street Journal article on Mr. Hardy detailed his life and, given his recent death, also reminded us about the “next man (or woman) up” dilemma for many businesses. Who will ultimately take the reigns—especially following a larger-than-life founder?

January 17, 2023 Special Topics Taxes

Estate Tax Exemption Uncertainty

And Other Takeaways from the Heckerling Estate Planning Conference

We had the opportunity to attend the 57th Annual Heckerling Institute on Estate Planning, one the largest conferences for estate planning professionals. This year’s week-long conference was the first to be held in person in a few years, and the exhibit hall and education sessions were full of good information and details on the estate, gift, and tax planning fronts. We share just a few topics of conversation and tidbits we picked up from the sessions and conference last week.

January 9, 2023 Dividend Policy Shareholder Liquidity

Dividends, Shareholder Signals & Present Value

As market and financial data for 2022 continue to roll in, we are beginning to prepare for our annual benchmarking study. One early finding is that investors clearly distinguished between companies that pay dividends and those that don’t.  Across the size spectrum, investors favored dividend-paying stocks in 2022. While it was a down year across the board, the average return for companies that paid dividends was less negative than those that did not.  In this post, we explore two potential reasons for this outcome and the lessons for family business directors.

January 3, 2023 Capital Structure Planning & Strategy

Southwest Airlines Meltdown and Your Investment Decision

Come Fly With Me (Soon?)

Last week, Southwest Airlines experienced significant disruptions and canceled thousands of flights following a winter blast smacking a large swath of the country. Underinvestment in system-critical operations was a key culprit, and it reminded me of the “Invest or Not to Invest” decision that faces family businesses. What investment decisions could Southwest have made before the crisis? And, what about your business? How do you make rational investment and capital expenditure decisions? Do you acquire a new business or modernize? What is a good investment?

In this post, we discuss two key areas to address these questions: how to identify investments available to your business and how to evaluate your available investment opportunities.

And, if you traveled during the storm, we hope you made it to your destination and home.

December 19, 2022 Performance Measurement Planning & Strategy

What Is on Your Family Business Box Score?

A question for you and your board, what is on your family business box score? When the lights are still on and things are stable, it can be easy to continue with business as usual and not look too closely at key return metrics. Creating a box score, and maybe more importantly, updating it consistently, can help prevent complacency.  Establishing fundamental metrics important to your business and benchmarking your performance to peers or ‘opponents’ can help quickly convey how the family business is doing to you and your shareholders. In this week’s post, we consider three metrics for your family business box score.