Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

Talking to the Numbers

What Do Your Customers Pay For?

It may be a tiresome cliché, but your family business really does make money buying low and selling high. It’s important to think about gross margin, because it tells you how much of a “mark-up” your customers are willing to pay for your good or service. The higher the “mark-up” the more revenue will be available to cover operating expenses and generate an operating profit.

Talking to the Numbers

Is Growth Optional for Your Family Business?

The income statement is a natural place to begin analyzing a company’s financial results, and revenue is the natural starting point for that analysis. We recently heard someone remark that everything good in business starts with revenue, and our experience working with family businesses of all stripes confirms that sentiment. While the absolute amount of revenue can be instructive (i.e., are we looking at a $10 million business or a $100 million business?), it is the trend in revenue that is most revealing. Is the business growing, treading water, or shrinking?

Capital Allocation FAQ

Determining the Right Hurdle Rate

How Good is Good Enough?

If family business directors are going to make good capital allocation decisions, they need to know what the right hurdle rate is.  If the hurdle rate is set too low, the family may experience weak future returns.  Setting the hurdle rate too high, however, introduces the risk that the family business will pass on attractive investment opportunities.  In this post, we consider how the hurdle rate relates to the weighted average cost of capital.

Capital Allocation Capital Structure Dividend Policy M&A Shareholder Engagement Sustainability Taxes

What Keeps Family Business Directors Awake at Night?

Stewarding a multi-generation family business is a privilege that comes with certain responsibilities, and each family business faces a unique set of challenges at any given time.  For some, shareholder engagement is not currently an issue, but establishing a workable management accountability program is.  For others, dividend policy is easy, while next gen development weighs heavily. Through our family business advisory services practice, we work with successful families facing issues like these every day.

Consulting Services

Family Business Advisory Services

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