Corporate Finance & Planning Insights for Multi-Generational Family Businesses
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.
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.
Family businesses are built on long-term capital investments. Capital structure refers to the mix of debt and equity financing used to make those investments. In this video, we explore what capital structure means for family businesses, the effect of capital structure on the weighted average cost of capital, and some qualitative considerations to consider when establishing a target capital structure.
A recent Wall Street Journal article on the relationship between younger adults and traditional financial institutions is potentially illuminating for family business leaders. Millennial and Gen Z attitudes toward money and financial institutions suggest that family businesses would be well-served to re-think their traditional financial communication strategies, adapting communication styles to engage next-gen family members effectively and explore innovative approaches for financial education and information sharing.
As a tribute to the late Charlie Munger, we reflect on his unique perspectives on investment strategies, highlighting his candid views on cryptocurrencies, diversification, and reliance on projections. We explore a few quotes that showcase Munger’s legacy in rational investing and his influential philosophies that continue to shape prudent financial decision-making.
This week’s blog centers around the challenges of asset allocation and investment decisions for family businesses, touching upon the importance of understanding a family’s appetite for risk and growth. We explore how the meaning assigned to the family business influences investment choices options and the necessity of balancing risk and expected returns. While there may not be a perfect answer for deciding how to invest, reevaluating what your family business needs and what it means to you will help you decide more wisely.
In the latest economic update, the U.S. GDP showed a resilient 4.9% growth in Q3 2023, surpassing expectations and driven primarily by personal consumption and exports. However, leading indicators suggest a potential slowdown, with economists predicting reduced GDP growth in the upcoming quarters. This week’s post delves into these trends, inflation rates, and the Federal Reserve’s monetary policies, offering useful insights for family businesses.
As Thanksgiving approaches, it reminds us of the unique challenges family business directors face in balancing what the family needs with the needs of the family business. A clear understanding of what the business means to the family is essential if decisions about dividend policy and capital allocation are to be made in a coordinated manner. This week’s post emphasizes how the meaning of your family business can help your family business directors decide who eats first — the family or the family business — this Thanksgiving.
Capital budgeting can’t be avoided — the only question is whether your family business has a consistent and disciplined process for evaluating potential investments or instead makes significant capital commitments in a more haphazard way. In this video, we describe the key elements of the capital budgeting cycle and identify some common potholes along the way.
Happy Halloween! This week, we have four frightening guests who share their most terror-inducing family business challenges.
