Family Business Director

Corporate Finance & Planning Insights for Multi-Generational Family Businesses

Capital Structure Planning & Strategy

Southwest Airlines Meltdown and Your Investment Decision

Come Fly With Me (Soon?)

Last week, Southwest Airlines experienced significant disruptions and canceled thousands of flights following a winter blast smacking a large swath of the country. Underinvestment in system-critical operations was a key culprit, and it reminded me of the “Invest or Not to Invest” decision that faces family businesses. What investment decisions could Southwest have made before the crisis? And, what about your business? How do you make rational investment and capital expenditure decisions? Do you acquire a new business or modernize? What is a good investment?

In this post, we discuss two key areas to address these questions: how to identify investments available to your business and how to evaluate your available investment opportunities.

And, if you traveled during the storm, we hope you made it to your destination and home.

Performance Measurement Planning & Strategy

What Is on Your Family Business Box Score?

A question for you and your board, what is on your family business box score? When the lights are still on and things are stable, it can be easy to continue with business as usual and not look too closely at key return metrics. Creating a box score, and maybe more importantly, updating it consistently, can help prevent complacency.  Establishing fundamental metrics important to your business and benchmarking your performance to peers or ‘opponents’ can help quickly convey how the family business is doing to you and your shareholders. In this week’s post, we consider three metrics for your family business box score.

Planning & Strategy Special Topics

Is Your Family Business Ready for the Next Recession?

A Look Ahead to 2023

As we begin to put a bow on 2022 and turn our attention to 2023, we suspect that the dreaded “R word” is on the mind of many of our readers as they contemplate the myriad challenges and obstacles their businesses will face in 2023. As a family business owner or director, now is the time to think critically about how your family business is positioned for a potential economic slowdown.  This post offers a few practical steps family business owners and directors can take to ensure their business continues to thrive even if Santa brings us a recession this year.

Capital Structure Valuation

All in the Family Limited Partnership

Many enterprising families have January 1, 2026, circled on their calendars. Why? Because the individual estate tax exemption reverts to $6 million (give or take, depending on inflation) in 2026 from its current level of $12 million.  As a result, many estates that are not currently large enough to be taxable will become so, and the effective tax rate for all estates will increase. Has your family considered a Family Limited Partnership? The “magic” of the FLP is the ability to transfer assets to heirs, and out of taxable estates, at discounted values. The IRS is skeptical of many FLP planning strategies, noting that audit challenges may become more frequent as the IRS puts its new $80 billion enforcement budget to work. While the valuation discounts applicable to FLPs may seem like estate planning magic, there really is no sleight-of-hand involved.  Instead, valuation discounts reflect economic reality. We talk more about this in this week’s post.

Dividend Policy Planning & Strategy Shareholder Engagement

Double Down or Cash Out: The Reinvestment or Distribution Decision

I recently got back from the AICPA’s Forensic and Valuation Services conference in Las Vegas.  While I came back richer in experience and CPE credit, the green felt of the blackjack table was less kind to my wallet. Matching your family shareholders’ growth objectives with their relative risk tolerance is a key directive for family business directors and one that is tied directly to what your family business means to you.  We highlight two corollary questions relating to growth, risk, and business meaning: investing decisions and distribution policy.

Planning & Strategy Special Topics

Review of Key Economic Indicators for Family Businesses

With economic data for 3Q22 beginning to trickle in, we look at a few key trends that developed during the quarter.  The tale of the tape in the third quarter was the same as it has been for virtually all of 2022—volatile equity markets, ongoing inflationary concerns, and rising interest rates.  In this post, we provide a concise and unbiased look at some of the manifested trends.

Planning & Strategy Special Topics Taxes

What Do the Midterm Elections Mean for You & Your Family Business?

The 2022 midterm elections are here, and, as usual, one of the most significant differences between Democrats and Republicans is tax policy. While voters are contemplating significant issues ranging from inflation, immigration, and gun control, the election outcome will also influence which tax priorities Democratic and Republican lawmakers will pursue over the next few years.

Planning & Strategy

Unfriended? Long-Term Planning and Facebook’s Stock Collapse

Meta Platforms (NASDAQ: META), formerly known as “Facebook,” recently released its third-quarter earnings and guidance for 2023. Let’s just say the market was less than pleased. Meta’s stock fell over 20% in after-hours trading, which is down over 65% year-to-date. But so what? We think the current sell-off presents two lessons to family businesses: Maintain a long-term perspective even in rough weather, and understand the season your business is in.


Fall 2022 Middle Market M&A Update

For this week’s post, we take a look at recent trends in middle market M&A. Despite turbulent economic and geopolitical conditions in the first half of the year, valuations in the middle market continued to hold their ground.  Still, whether looking to buy or sell, family business owners would be wise to act sooner rather than later, as declines in volume and value thus far in 2022 suggest tightening conditions in the middle market.

Consulting Services

Family Business Advisory Services

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