Corporate Finance & Planning Insights for Multi-Generational Family Businesses
We are excited to share the release of Z. Christopher Mercer’s latest book, Buy-Sell Agreements: Valuation Handbook for Attorneys published by the American Bar Association. This week, we share an excerpt from the book and what you can expect to find in the full copy.
Since 2017, the Nordstrom family has made multiple attempts to take the company private but has been rebuffed by the board. Nordstrom was in the news again this week, with the company disclosing that the members of the Nordstrom family were once again offering to take the company private, this time $23 per share (compared to $50 share six years ago). The Nordstrom board has formed an independent committee to evaluate the offer. In this week’s post, we identify three lessons for family business directors from the unfolding saga.
The current economic state is driving operating costs higher for many businesses and eating into profits. Employers are combating this by reevaluating their hiring strategies, which include resetting labor costs and reducing starting salaries. Margin analysis can be a beneficial tool for evaluating performance, and becoming familiar with the typical margins of your family business will provide a touchpoint for identifying opportunities to preserve and grow profits for your family business. Since ‘typical’ margins vary from industry to industry, being able to benchmark to similar companies can give family businesses a better idea of where they stack up.
We’ve recently observed private equity investors learning a lesson about liquidity risk, which family shareholders have always known. A couple of weeks ago, the Wall Street Journal noted that — amid a sluggish M&A market — PE-backed companies were increasingly turning to lenders to fund so-called dividend recapitalizations in a bid to provide liquidity to impatient investors. This week, we explore a PE strategy that might be worth considering for some family businesses: divided recapitalization.
Coming off a run of economic data releases in the last few weeks, we take a look at the numbers and some of their implications for the broader economy in this week’s post. GDP growth in the U.S. economy measured 2.8% in the second quarter of 2024, outpacing growth of 1.4% in the first quarter. Following persistently elevated measures in the first quarter, recent inflation readings have cooled. The following sections provide a brief look at these economic trends and their implications, sourced from Mercer Capital’s National Economic Review.
Our Family Business Advisory team put together a powerpoint deck, “Case Study: Kellogg Company – Attempting to Unlock Shareholder Wealth in a Mature Business” which tracks key events in Kellogg’s history and comments on the transaction. There are lessons family business owners can learn from the transaction and from Kellogg’s recent moves.
Volatile times are never easy to navigate, but there are strategies family business directors can employ to keep their business on course. As the heat waves, hurricanes, and a potential recession loom, we wanted to take a step back and highlight three strategies family business directors can adhere to in these uncertain times.
As the pandemic recedes further into the rearview mirror, long-term business consequences continue to reverberate through the economy. In addition to recalibrating expectations among domestic manufacturers, foreclosures on distressed commercial real estate are accelerating. Since enterprising families often accumulate significant real estate holdings, the lingering pandemic-induced weakness in real estate values may encourage families to evaluate their real estate strategies. In this week’s post, we discuss three broad real estate strategies for families owning and operating businesses.
Current economic uncertainties may have family businesses feeling more like they’re playing in an Open Championship than a routine PGA/LIV tour event. While there are many ways to steer your family business through uneven times, these lessons are a good starting point.
Last week, the consumer-price index decreased slightly from May, resulting in a year-over-year inflation measure of 3%. And as earnings season approaches, the broader stock market is eyeing new records. Last year, we discussed how family business leaders could use earnings season as an opportunity to discuss strategy and goals with their family board. Today, we focus on earnings season as a broader indication of inflation and investor sentiment in the months to come.
