Corporate Finance & Planning Insights for Multi-Generational Family Businesses
The best performance metrics address not just “what” performance has been in the past, but reveal the “why” behind that performance and give direction for “how” to improve performance in the future. In last week’s post, we introduced return on invested capital (ROIC) as a comprehensive performance measure for family businesses. In this week’s post, we will dig a little deeper with ROIC, demonstrating how we can use ROIC to answer the “what,” “why,” and “how” questions for your family business.
Revenue growth and profitability are critical measures for the health of any family business, but by themselves, they tell only half of the story. As a family business director, you need the whole story. We’re not aware that Paul Harvey was a financial analyst, but if he were, we suspect his favorite performance metric would have been return on invested capital, because it tells you the rest of the story.
This post is the third of four installments from our Corporate Finance in 30 Minutes whitepaper. In this series of posts, we walk through the three key decisions of capital structure, capital budgeting, and dividend policy to assist family business directors and shareholders without a finance background to make relevant and meaningful contributions to the most consequential financial decisions all companies must make. This week, we focus on capital budgeting.
Recently published academic research from Vasiliki Kosmidou and Manju K. Ahuja highlights the relationship between innovation and family wealth. Our goal in this post is to introduce some of the authors’ most relevant findings to family business directors, translating, as we do, into a less academic idiom.
Addressing topics such as share redemption programs to the role of non-family directors in a family business, Family Business Director speaks with board member Edward Jackson of H.G. Hill Realty Company for his insights on questions common to family businesses. This post is part of a series of interviews with family business leaders and experienced advisors.
Family Business Director is off enjoying 4th of July festivities this week. For our readers that are looking for some beach reading, we thought we would direct your attention to some of our more popular posts in case you missed them the first time around.
This post is the second of four installments from our Corporate Finance in 30 Minutes whitepaper. In this series of posts, we walk through the three key decisions of capital structure, capital budgeting, and dividend policy to assist family business directors and shareholders without a finance background to make relevant and meaningful contributions to the most consequential financial decisions all companies must make. This week, we focus on capital structure.
As a part of a series of to-do lists aimed at ensuring the long-term sustainability of your family business, this week’s to-do list focuses on eliminating unwanted surprises related to the estate tax. Part of this means adequately preparing shareholders to manage their emerging liabilities.
Family business owners cite different motives for investing their time, energy, and savings into building successful businesses. Most family business owners have the desire to provide financially for their heirs. As a result, one of the most common concerns such owners cite is the ability to transfer ownership of the family business to the next generation in the most tax-efficient way.
It is understandably frustrating for family business directors when the simple question – what is our family business worth? – elicits a complicated answer. While we would certainly prefer to give a simple answer, the reality a valuation is attempting to describe is not simple.
The answer depends on why the question is being asked. We know that sounds suspect, but in this post, we will demonstrate why it’s not. Let’s consider three potential scenarios that require three different answers.
