Valuation Principles Family Business Directors Should Know in 2021
Family business directors will make plenty of difficult decisions in the remainder of 2021, and many of those decisions will require assessing the value of the company’s shares, a particular business segment, or a potential acquisition target. What should you and your fellow directors know about valuation? In our experience, there are six basic valuation principles that can guide directors as they make tough valuation-related decisions in the coming year.
Navigating Tough Family Business Conversations
How should your family business have discussions around sensitive topics? Perhaps it is a patriarch who has run one too many strategic board meetings, the cousin who refuses to take their Vice President role seriously, or the aunt who is rather loose in defining what a “business meal” is. “No Aunt Millie, this is not a case of defining what ‘is‘ is”.
The Three-Legged Stool of Family Business
Our family business advisory practice is focused on three strategic financial questions that weigh on family business directors and can keep them awake at night. Clients often solicit our advice because they are struggling with one of these questions. But, in our experience, the questions can’t really be tackled in isolation. Each question comprises one leg of the three-legged stool of the family business. As an engineering-minded client recently pointed out to us, while it is impossible for a three-legged stool to wobble, it can be crooked. If the three legs are not designed to work together, the stool won’t be level, and won’t hold anything valuable for long.
All EBITDA Is Not Created Equal
In the world of family-owned and other private businesses, EBITDA is the most commonly cited performance measure. Every company has EBITDA, but some EBITDA is better than others. Why is that?
The Economics of Family Shareholder Redemptions
Regardless of the reason, significant shareholder redemptions are among the least understood corporate transactions. In this post, we consider the economics of family shareholder redemptions from three perspectives: the selling shareholder, the family business, and the remaining shareholders.
We hope you have a relaxing and enjoyable summer break. If you know a family business director or advisor that might benefit from our content, forward this note or email us and we will be sure to add them as a subscriber. Happy reading!
