Family Business Director

March 18, 2025 Capital Budgeting Dividend Policy M&A Planning & Strategy Special Topics Valuation

Crown Castle’s Lessons for Family Businesses

Last week’s news that the publicly traded REIT Crown Castle (ticker: CCI) had agreed to divest its Fiber segment was a bit of a perfect storm of the issues we focus on here at Family Business Director: capital allocation and strategy, return on invested capital, valuation, and dividend policy. After years of underperformance and stagnating dividends, Crown announced a “strategic review” of its fiber business in December 2023, which culminated in Thursday’s announcement that CCI’s fiber segment would be sold to two buyers for an aggregate purchase price of $8.5 billion. In this week’s post, we review how Crown Castle’s divestiture of its Fiber segment highlights the need for an integrated framework for family business directors to evaluate and monitor the key strategic finance decisions that influence family shareholder returns for the years and decades to come.

March 12, 2025 Planning & Strategy Valuation

Why the Value of Your Family Business Matters

In last week’s edition of the Family Business Director, we reviewed six valuation principles for family business directors to keep in mind when developing valuation estimates. As family business directors, it is important to understand not just the “how” of maintaining an accurate estimate of the value of your family business but also the “why.” In this week’s post, we have compiled a list of reasons why it is essential for both family shareholders and family business directors to know what the family business is worth (even if the family has no intention of selling).

March 3, 2025 Valuation

Back to Valuation Basics

As a family business director, many decisions you’ll make in 2025 will require assessing the value of the company’s shares, a particular business segment, or a potential acquisition target. What should you and your fellow directors know about valuation? In our experience, getting back to the basics with these six principles can be worthwhile.

February 24, 2025 Planning & Strategy Special Topics

The Most Efficient Way to Increase the Value of Your Family Business

In last week’s post, we reviewed what EBITDA is and why not all EBITDA is created equal. In case you missed it, we ended that post with the following statement: “…improving EBITDA margins can have a multiplicative impact on your family business’s value by both providing more EBITDA and justifying a higher multiple.” So, is it really true that a higher EBITDA margin will also bring a higher multiple, or were we just getting carried away with our own thesis? For this week’s post, we pull some market data to test our assertion.

February 18, 2025 Special Topics

Is All EBITDA Created Equal?

In the world of family-owned and other private businesses, most everyone looks to EBITDA (earnings before interest, taxes, depreciation, and amortization) as an indicator of financial performance. Legendary investor Warren Buffett, however, holds a long-standing grudge against EBITDA. Here at Family Business Director, we believe there is a time and a place for EBITDA in financial analysis, but Mr. Buffett does have a point — some EBITDA is better than others. But why? We explore EBITDA and why it matters for family business directors in this week’s post.

February 12, 2025 Special Topics

What Family Business Director Has Been Reading

Fresh off the Super Bowl with no more football in sight, it’s time to pick up that book collecting dust on the shelf.  To help ease you back into the routine of things as we head into the dog days of winter, here’s a quick roundup of what we have been reading.

February 4, 2025 Planning & Strategy Special Topics

Tariff Talk and Adaptive Forecasting

How Family Business Directors Can Stay Ahead of Unpredictable Times

Over the weekend, President Donald Trump signed an executive order that imposed an additional 25% tariff on Canadian and Mexican imports and an additional 10% tariff on imports from China. As the socio-political atmosphere is continuously changing, it is critical for family business directors to keep a pulse on current developments and understand the different implications that may impact or change their industry moving forward. Maintaining an adaptive forecast is one of the best practices for being able to pivot during unpredictable times. As family business managers and directors re-evaluate their projections, we revisit some of the mental biases that can potentially skew forecasts.

January 27, 2025 Planning & Strategy Special Topics

A New Approach for Business Succession Planning

Family Business Director attended the 59th Annual Heckerling Institute on Estate Planning earlier this month. In one of the standout sessions, we reviewed purpose trusts and how companies like Patagonia are employing them for succession planning. Even if your family business is unlikely to follow suit, Patagonia’s novel business succession strategy provides important lessons and reminders for family directors. Your family business may not have a purpose as lofty as “protecting the planet,” but you and your shareholders will benefit if the purpose is clearly articulated, protected by thoughtful governance structures, and visible through disciplined and transparent reporting.

January 20, 2025 M&A

Winter M&A Update for Family Businesses

Middle market M&A activity in the third quarter of 2024 showed signs of the “summer slowdown,” as fewer PE deals were reported compared to the first two quarters of the year. However, as deal activity begins to revert to pre-2023 levels, the outlook for 2025 points to signs of optimism, while some hurdles remain on the horizon. In this week’s post, we look back at middle market (defined as total enterprise value of $100 – $500 million) transaction activity in 2024 and look ahead to what may be on the horizon for middle market M&A in 2025.

January 14, 2025 Capital Budgeting Planning & Strategy

Three Considerations for Capital Projects

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.