Family Business Director

March 5, 2024 Planning & Strategy Taxes

The Times They Are A-Changin’

The sunsetting provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire after 2025. Family business directors must be aware of these changes, especially the Qualified Business Income (QBI) deduction and federal gift and estate tax exemption amounts. Expiration of the QBI deduction would increase taxes for pass-through entities, while the reduction of estate tax exemptions would significantly impact family wealth planning. Proactive planning and consultation with tax professionals are essential to ensure the continued success of family businesses.

February 26, 2024 Capital Budgeting Planning & Strategy Taxes

Capital Planning and IRS Section 6166

Successful enterprising families are careful and deliberate consumers of family capital. In specific circumstances, Section 6166 of the Internal Revenue Code can provide a capital planning alternative family business directors should consider when facing large contingent liabilities for shareholder estate tax obligations.

February 20, 2024 M&A Planning & Strategy

Ownership Succession and the NFL

The NFL has functioned as a family business incubator of sorts throughout its decades of existence. While other major U.S. professional sports leagues have embraced private equity ownership in recent years, the NFL has held out in favor of the family-owned model. The introduction of private equity into the league (expected at next month’s league meetings) will have far-reaching effects, both positive and negative. In this week’s post, we look at the pros and cons of private equity ownership in NFL franchises and how, like the NFL, family business owners considering private equity investment should weigh the pros and the cons before bringing PE firms into ownership groups.

February 12, 2024 Capital Structure Planning & Strategy

Viva Diversification: The Vegas Transformation and Your Family Business

Las Vegas has transformed from the gambling-centric “Sin City” to a luxury entertainment destination. As the city’s revenue model shifted from primarily gaming to encompass live shows, fine dining, and global sporting events, it reflects a successful adaptation to changing market dynamics and consumer preferences. Vegas’ transformation is a compelling case study for family businesses considering diversification strategies, and provides a good example of strategic planning and investment in a future that honors past successes while exploring new opportunities.

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.