Family Business Director

March 28, 2022 Planning & Strategy

Nine Characteristics of Successful Family Wealth Plans

Recently we had the opportunity to attend (virtually) the Johns Hopkins All Children’s Foundation 24th Annual Estate, Tax, Legal & Financial Planning Seminar.  This year’s keynote speaker was Pamela Lucina, Chief Fiduciary Officer and head of the Trust & Advisory practice for Northern Trust Wealth Management, one of the country’s largest trust companies.  Her keynote presentation highlighted the characteristics of successful families and provided practical strategies to avoid mistakes commonly seen in the administration of multigenerational wealth plans and trust structures. In this week’s post, we summarize Ms. Lucina’s nine key observations.

March 21, 2022 Planning & Strategy

Identifying Acquisition Targets and Assessing Strategic Fit

This week, we welcome Tim Lee to the Family Business Director blog. This post originally appeared as an article in a recent Mercer Capital publication, The Transaction Advisory Update. Many family businesses will find the post interesting because it provides touch points and practicalities for identifying viable merger and acquisition targets and assessing strategic fit.

March 14, 2022 Special Topics

The Perils and Pleasures of Forecasting in Family Businesses

The list of forecasting cliches is long (thanks, Yogi Berra!), but we were recently reminded of a good one: there are only two kinds of forecasts – lucky and wrong.  That reminder came from an article by Joachim Klement 10 Rules for Forecasting.

Klement’s list is focused on macro level economic forecasting, but several of his rules apply equally well to the micro level of individual family businesses.  In this post, we will consider four of Klement’s rules in the context of family businesses.

March 7, 2022 Special Topics

Family Business Director’s Reading Roundup

Here at Family Business Director, we are focused on the numbers of family business: measuring and assessing financial performance, establishing dividend policy, setting capital structure, making capital budgeting decisions, and structuring shareholder redemptions. All that said, we also recognize that family business leaders face many other critical challenges. So, in this week’s post, we provide a quick roundup of some of the best pieces we’ve come across recently dealing with management succession, governance, attitudes toward wealth, family relationships, board dynamics, and more.

February 28, 2022 Capital Budgeting

Three Questions to Consider Before Undertaking a Capital Project

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.

February 21, 2022 Capital Structure Shareholder Engagement

Breaking Up Is(n’t) Hard to Do

Kicking off with the inspired lyrics, “Down dooby doo down down,” Neil Sedaka assured legions of teenage girls in 1962 that “Breaking Up Is Hard to Do.”  Sixty years later, the actions of the Follett family are telling family business directors that maybe breaking up is not so hard after all. In this week’s post, we explore the question “Why do different businesses sometimes need different owners?” by examining the Follet family’s recent sale of each of its three operating divisions to a different buyer.

February 14, 2022 Special Topics

Review of Key Economic Indicators for Family Businesses

Family business directors are often afforded a luxury that their publicly traded counterparts are not: the ability to focus on and plan for the long term rather than solely the next quarter’s earnings report. While family businesses may not have the in-house economists and research departments of the larger public, it is crucial for the management and boards of family businesses to keep tabs on the overall economic environment in which they operate, as an understanding of the metrics and trends driving or hampering growth in the economy can inform effective and relevant strategic, tactical, and operational planning and decision making aimed at maximizing long-term shareholder returns.  With that, we take a look at a few of the broad trends that bore themselves out in the U.S. economy through the end of 2021 and the first months of 2022. 

February 7, 2022 Planning & Strategy

What Publix Supermarkets Can Teach Family Businesses

While there are likely dozens of lessons to be learned from Publix, family business owners and leaders should consider three areas key to Publix’s success over the last 90 years: long-term planning, smart diversification, and strong family culture.

January 31, 2022 M&A

Transaction Outlook 2022

Dealmakers logged record levels of merger and acquisition activity in the middle market (deal values between $10 million and $500 million) in 2021. In this post, we highlight a few of the trends that bore themselves out in middle market M&A activity in 2021 that family business owners and directors should keep in mind when evaluating potential transactions in 2022.

January 24, 2022 Planning & Strategy Special Topics

2022 Credit Market Outlook for Family Businesses

Barring a change in the economic backdrop, the availability of debt financing for most family businesses in 2022 should be good; however, the cost of borrowing probably will rise in 2022. Market participants are highly certain the Fed will raise short-term policy rates to address high inflation that massive growth in monetary aggregates since March 2020 unleashed on financial markets initially and now the broader economy.