Family Business Director

February 7, 2024 Planning & Strategy Special Topics Valuation

A Matter of Life (Insurance) and Death

Life Insurance as a Funding Mechanism for Shareholder Buyouts

In the case of Connelly v. United States, a family-owned roofing and siding materials company, Crown C Supply Company, Inc., faces a complex legal and financial challenge following the death of one of its major shareholders. The dispute centers on whether life insurance proceeds should be included in the company’s equity value for buyout purposes, a decision with significant implications for the valuation of shares and the financial future of the company. This case, now headed to the Supreme Court, highlights the critical importance of clear buy-sell agreements and the role of life insurance in shareholder buyouts, offering essential insights for family businesses navigating similar transitions.

January 29, 2024 M&A Planning & Strategy Special Topics

5 Reasons Buyers Need a Quality of Earnings Report

In 2024, as the prospect of Fed rate cuts begins to attract buyers back into the market after a period of caution in 2022 and 2023, the importance of thorough due diligence cannot be overstated. Family businesses, in particular, should pay close attention to the crucial role that a Quality of Earnings (“QofE”) report can play in their acquisition decisions. From uncovering sustainable earnings and identifying cost-saving potentials to understanding revenue synergies and assessing capital needs, a comprehensive QofE report emerges as an indispensable tool for family business directors aiming to navigate the complexities of acquisitions with confidence and strategic insight.

January 23, 2024 Planning & Strategy

Ownership & Succession Planning in 2024

The Green Bay Packers’ approach to succession planning, exemplified by their strategic transitions from Brett Favre to Aaron Rodgers and then to Jordan Love, serves as a valuable lesson for family businesses in 2024. Key aspects of effective succession planning include transparent communication among shareholders to ensure decisions are in tune with both the business’s and the family’s needs, and flexibility for unforeseen events, allowing the family business to maintain success and longevity.

January 16, 2024 Capital Structure Planning & Strategy

How Does Your Family Business Think About Philanthropy?

Martin Luther King Jr. Day is often used by companies, including family businesses, to focus on giving back and charitable activities. How your family business views itself — as a source of wealth, lifestyle, or growth — significantly influences its approach to philanthropy and charitable giving. In this week’s post, we highlight some considerations for your family board regarding philanthropy and your family business.

January 8, 2024 M&A Planning & Strategy

A 2024 M&A Update

In this week’s post, we take a look at the year that was in middle market M&A and offer a few thoughts regarding the potential for elevated deal activity in 2024. Despite depressed levels of deal activity in the middle market in 2023, there are reasons to be optimistic for increased levels of dealmaking in 2024. We’ll cover that and more in this week’s post.

January 2, 2024 M&A Planning & Strategy

5 Questions for Family Business Directors in 2024

In 2023, family businesses experienced varying degrees of success, prompting a focus on key strategies for 2024. These strategies include assessing the economic outlook, understanding customer needs, maintaining and growing profit margins, revising M&A strategies, and adapting to emerging trends like generative artificial intelligence. Directors are encouraged to proactively address these areas to ensure 2024 is a successful year for their family businesses.

December 19, 2023 Capital Structure

Capital Structure in 5 Minutes

New Video Released on Family Business On Demand Resource Center

Family businesses are built on long-term capital investments. Capital structure refers to the mix of debt and equity financing used to make those investments. In this video, we explore what capital structure means for family businesses, the effect of capital structure on the weighted average cost of capital, and some qualitative considerations to consider when establishing a target capital structure.

December 11, 2023 Shareholder Engagement

Talking Money with the Next Gen

A recent Wall Street Journal article on the relationship between younger adults and traditional financial institutions is potentially illuminating for family business leaders.  Millennial and Gen Z attitudes toward money and financial institutions suggest that family businesses would be well-served to re-think their traditional financial communication strategies, adapting communication styles to engage next-gen family members effectively and explore innovative approaches for financial education and information sharing.

December 4, 2023 Special Topics

Memorable Mungerisms

As a tribute to the late Charlie Munger, we reflect on his unique perspectives on investment strategies, highlighting his candid views on cryptocurrencies, diversification, and reliance on projections. We explore a few quotes that showcase Munger’s legacy in rational investing and his influential philosophies that continue to shape prudent financial decision-making.

November 27, 2023 Capital Budgeting Capital Structure Planning & Strategy Shareholder Engagement

Navigating the Buffet of Investment Options

A Guide for Family Businesses

This week’s blog centers around the challenges of asset allocation and investment decisions for family businesses, touching upon the importance of understanding a family’s appetite for risk and growth. We explore how the meaning assigned to the family business influences investment choices options and the necessity of balancing risk and expected returns. While there may not be a perfect answer for deciding how to invest, reevaluating what your family business needs and what it means to you will help you decide more wisely.