Family Issues to Address in Transferring the Business to the Next Generation
In my working with a variety of family businesses, one of the key issues to address is to develop a succession plan for the ownership of the business. That is, who will own the business in the future (and when, and how will this occur)? Obviously, the current owners want to receive fair financial remuneration and they usually want to ensure the ongoing health of the company, given that payments are set up over time.
In addition to the financial and business aspects, there are numerous family and relational issues which need to be addressed, as well. These include:
* how to be fair to all children/heirs, regardless if they work in the business or not
* can non-family executives buy part of the company?
* fears of non-family executives regarding their future
* the impact of non-working family members who become owners of the company
* conflicts and competing interests among family members.
Just like the complexity that exists in running a family business, so there are myriad interconnected issues in passing on the ownership of the business successfully.
This month I have an article addressing these issues in the Journal of Financial Planning entitled “Hidden Dragons: Handling Family Conflicts in Buy-Sell Agreements for Business Succession”. For those of you for which this is a relevant issue (whether you are an owner, a non-family manager, a family member, or a professional advisor), the article is posted on line (although the online version is a little “dry” because they don’t include the case examples).
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