Gift, Estate, & Income Tax Compliance

February 1, 2018

Mercer Capital’s Value Matters® 2018-02

Dividend Policy and the Meaning of Life

(Or, At Least, Your Business)

Our multi-generation family business clients ask us about dividend policy more often than any other topic. This isn’t surprising, since returns to family business shareholders come in only two forms: current income from dividends and capital appreciation. For many shareholders, capital appreciation is what makes them wealthy, but current income is what makes them feel wealthy.

In other words, dividends are the most transparent expression of what the family business means to the family economically. Knowing what the business “means” to the family is essential for promoting positive shareholder engagement, family harmony, and sustainability.

The business may “mean” different things to the family at different times (or, to different members of the family at the same time). In our experience, there are four broad “meanings” that a family business can have. 

These “meanings” are not mutually exclusive, but one will usually predominate at a given time. Importantly, the “meaning” of the business has implications for dividend policy.

  • Meaning #1 - The family business is an economic growth engine for future generations. For some families, the business is perceived as a vehicle for increasing per capita family wealth over time. For these families, dividends are likely to take a backseat to reinvestment in the business needed to fuel the growth required to keep pace with the biological growth of the family. 
  • Meaning #2 - The family business is a store of value for the family. For other families, the business is perceived as a means of capital preservation.

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August 2026 | Charitable Gifting Before the Exit
Value Matters® August 2026

Charitable Gifting Before the Exit | Timing, Valuation, and Planning Pitfalls

For advisors to high-net-worth business owners, charitable gifts of appreciated business interests can offer significant tax advantages. They can also be among the more technically demanding charitable planning strategies.
WEBINAR: Buy-Sell Agreements: Designing Valuation Processes
WEBINAR REPLAY: Buy-Sell Agreements: Designing Valuation Processes
The program examines the purpose of buy-sell agreements, key valuation provisions, formula-based and appraisal-based pricing methods, and alternative appraiser structures. It also addresses practical considerations for implementing and updating the valuation process, including timing, costs, funding terms, and appraiser continuity.
Mercer Capital to Sponsor ACTEC Florida Fellows Meeting
Mercer Capital to Sponsor ACTEC Florida Fellows Meeting
Mercer Capital is pleased to sponsor ACTEC’s 2026 Florida Fellows Meeting, taking place Wednesday, August 19, 2026, at The Breakers in Palm Beach, Florida. Tim Bronza, CPA, ASA, and Sujan Rajbhandary, CPA, ABV, will represent the firm at the meeting.ACTEC, the American College of Trust and Estate Counsel, is an organization of trust and estate lawyers and law professors in the United States and around the world. Its Fellows are committed to maintaining excellence in the trust and estate legal field and improving the practice of trust and estate law.The 2026 Florida Fellows Meeting will feature an afternoon of educational programming, networking, and discussion during ACTEC’s return to The Breakers. This year’s program includes sessions on trust litigation, single-member LLC planning, and the legal, ethical, and practical challenges attorneys face when counseling clients on disinheritance.Tim Bronza serves as Managing Director of Mercer Capital’s Florida office. He has extensive experience valuing business interests for federal gift, estate, and income tax purposes and leads sophisticated valuation engagements across corporate and fiduciary contexts.Sujan Rajbhandary is a Senior Vice President with Mercer Capital and a member of the firm’s Gift, Estate & Income Tax Group. He has 20 years of experience advising closely held businesses, family-owned enterprises, and public companies on valuation and tax planning matters. He is a regular contributor to Mercer Capital’s Value Matters Newsletter.Mercer Capital regularly works with owners, fiduciaries, and professional advisors on valuation and advisory matters involving trusts, estates, tax planning, transactions, and disputes. The firm is pleased to support educational programs that help professionals navigate complex financial issues in estate and trust matters.Mercer Capital looks forward to connecting with attendees in Palm Beach. To learn more about this year’s conference, visit the Florida Fellows Meeting website: https://events.rdmobile.com/Events/Details/19947

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