Corporate Finance & Planning Insights for Multi-Generational Family Businesses
It is understandably frustrating for family business directors when the simple question – what is our family business worth? – elicits a complicated answer. While we would certainly prefer to give a simple answer, the reality a valuation is attempting to describe is not simple.
The answer depends on why the question is being asked. We know that sounds suspect, but in this post, we will demonstrate why it’s not. Let’s consider three potential scenarios that require three different answers.
As we noted in last week’s post, directors should take this economic opportunity to think more broadly about the portfolio of assets owned by their family business. Are any pieces extraneous? Are there any pieces that are missing? For family businesses that have hesitated to make acquisitions in the past, the missing pieces do not have to be big, nor do they have to be existing competitors. In this week’s post, we offer five categories of targets we think would be helpful to expand your list of potential acquisition opportunities.
Family directors have rightly been focused on keeping their people safe and healthy, and taking the steps necessary to help their businesses survive the pandemic. It will eventually be time to look ahead, however. When that time comes for your family business, what will you be thinking about?
This week our blog features a short (less than 30 minute) webcast that provides insight on the current opportunity to enhance the long-term sustainability of your family business.
One thing in short supply thus far in the pandemic has been perspective. We know that GDP fell by more than 30% during the second quarter, but how does that translate into the actual financial performance of businesses? Family business directors have been flying blind over the past few months, with no reliable way to benchmark the performance of their businesses.
Earnings season for the second quarter of 2020 gives us the first opportunity to see how the COVID-19 pandemic is affecting businesses. In this post, we elaborate on four themes that emerge from the data.
The economic effects of the COVID-19 pandemic are dire, and family businesses are not immune to the economic fallout from the virus. Yet we are confident that family businesses are best positioned to survive and lead in the post-pandemic economic recovery.
For family shareholders who are optimistic about the resilience of their family businesses and focused on the long view, this is an ideal time to execute intrafamily transfers in pursuit of estate planning objectives.
In this week’s post, we have assembled some helpful resources we have come across that provide helpful insight on the estate planning opportunities and strategies available to family business owners during 2020.
To be sustainable, family businesses need to invest capital wisely. As directors, the investment decisions you make today can define the family business for future generations. Before making a significant investment decision that will be hard to reverse, it is a good idea to evaluate how other companies in your industry are investing their capital.
The goal of “maximizing shareholder value” is fast assuming its rightful place in the dustbin of financial history as more families embrace a broader vision of relevant stakeholders for their enterprises. The freedom to develop a balanced scorecard of performance objectives that includes both financial and non-financial goals is one of the most rewarding aspects of family business.
Embracing non-financial objectives does not mean, however, that a family business can be unconcerned about their profitability. After all, operating efficiency helps to underwrite the various non-financial goals and values the family chooses. So, our first comparison when benchmarking performance for a family business is to evaluate profitability.
Managing a family business without benchmarking data is a bit like shopping for clothes in a store with no mirrors. Without context, financial performance is hard to interpret. Directors are responsible for making long-term decisions that can influence the course of a family business for decades. Access to relevant benchmarking data is essential for directors as they contemplate strategic financing, investment, and distribution decisions.
We have structured our 2020 Benchmarking Guide for Family Business Directors around seven questions designed to provide the necessary context for financial decision-making in family businesses.
