Family Business Director

July 14, 2020 Performance Measurement

How Much Money Do Family Businesses Like Ours Make?

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.

July 6, 2020 Performance Measurement

Seven Questions Benchmarking Can Answer for Your Family Business

Introducing the 2020 Benchmarking Guide for Family Business Directors

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.

June 29, 2020 Dividend Policy

Five Things to Keep in Mind When Evaluating the Dividend Policy of Your Family Business

Dividend Misunderstandings?

In a recent Wall Street Journal article, Professor Alex Edmans of the London Business School offers an impassioned plea for public companies to stop prioritizing dividend payments. While his provocative suggestions may have some merit for public companies (which were, in all fairness, the professor’s intended audience), they do not translate well to most family businesses. So, how should family businesses think about dividend policy?  In this post, we provide a non-exhaustive list of five things to keep in mind while evaluating your family business’s dividend policy.

June 22, 2020 COVID-19 Coverage Special Topics

Family-Owned Real Estate in the Aftermath of COVID-19

Accumulating real estate seems to be a natural strategy for many family business owners. After all, real estate is generally assumed to be less risky than the operating business of the family. Further, so long as the properties have a reasonable range of alternative future uses, the returns to the real estate portfolio often have a low correlation to the returns from the operating business. However, the market data we review in this week’s posts suggests that these assumptions may not hold as well in a pandemic.

June 15, 2020 COVID-19 Coverage Special Topics

Buy-Side M&A Opportunities in the Aftermath of the COVID-19 Pandemic

While it may be difficult to think past the day-to-day of operating in the current environment, acquisition opportunities are likely to be on the horizon over the next few years, most likely at attractive valuations for acquirers.

June 8, 2020 Valuation

What Is a “Level” of Value, and Why Does it Matter? (Part 3)

In last week’s post, we demonstrated how critical getting the level of value right is for family businesses for estate planning, acquisitions, and divestitures. We conclude our series on the levels of value this week, by turning our attention to shareholder redemption transactions.

June 1, 2020 Valuation

What Is a “Level” of Value, and Why Does it Matter? (Part 2)

In last week’s post, we defined the three principal levels of value and explained that the levels reflect differing perspectives on expected future cash flows and risk.  This week, we turn our attention to the importance of the levels of value for family businesses.

May 26, 2020 Valuation

What Is a “Level” of Value, and Why Does It Matter? (Part 1)

Family shareholders are occasionally perplexed by the fact that the value of their shares can have more than one value.  This multiplicity of values reflects the economic fact that different markets, different investors, and different expectations necessarily lead to different values.

Business valuation experts use the term “level of value” to refer to these differing perspectives. Each of the basic levels of value corresponds to different perspectives on the value of the business.  In this post, we will explore the relevant characteristics of each level.

May 18, 2020 Special Topics

Q&A: Five Questions with Ralph Jones

From time to time, Family Business Director will interview family business leaders or experienced advisors to get their perspective on important questions common to family businesses.  In this installment, we talk with Ralph Jones, Executive Chairman of Jones Family of Companies.  Ralph offers great insight that we know our readers will profit from.

May 11, 2020 COVID-19 Coverage Planning & Strategy

What Makes a Forecast Useful for a Family Business?

Family businesses devote time and resources to creating forecasts and budgets to guide resource allocation and strategy decisions. Yet, the forecasts and budgets for 2020 that many family businesses spent months creating are now worthless. So managers and directors face the task of revising and updating those forecasts amid a uniquely uncertain environment that the pandemic has caused. In this post, we provide some ideas of how to “loosen up” forecasting models to make them more useful.