Ownership structures In some cases , your children may want to continue owning the business , but may not wish – or be qualified – to actually run the operation from day to day .
The solution is quite straightforward . First , ensure you have a base of salaried managers who are competent to take over the company . Second , get a lawyer and draw up paperwork that hands ownership of the company over to the children . Technically , this is a sale of the company and so some funds or stock shares have to change hands , and the children will have certain tax liabilities .
Those documents should stipulate the children are silent owners who aren ’ t involved in the company ’ s operations . And this ownership is more common than you might think . In fact , you probably buy your toothpaste and condiments from companies with famous founder ’ s names that are , in fact , no longer run by family members .
Your lawyer will also draw up a structure allocating shares of the company to each of the siblings . Generally , these shares are issued in the form of preferred or common stock . Depending on the company ’ s structure , these shares may or may not come with voting rights related to decisions made by the company ’ s board of directors .
Keep in mind that when allocating these shares , there is sometimes a big difference between “ fair ” and “ equal .”
If one of your children works in the business , but does not want to take over , the share structure needs to account for the economic value added by that child ’ s work . If he ’ s working hard , not simply drawing a salary , than his share of the company should be greater than what you ’ d give to a child who ’ s invested a lifetime into freeloading .
Jokes aside , these are tough decisions . You won ’ t like making them . But if you fail to do so , and be honest about the reasons for your choices , you ’ ll leave a legacy of mistrust and bickering among your kids . Invest the time and craft some family unity .
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Sale options Sometimes , none of the children are suitable . Or , like many entrepreneurs , you may want your children to pursue their own dreams rather than taking over yours .
If that ’ s the case , a sale of the business is your best option .
You have three primary options : i ) Sell to your management team – If your existing managers can raise the capital , and have genuine interest in taking over , this can be the best option .
Your existing managers have deep knowledge of the daily operational workings . They ’ ve seen the books and don ’ t have to be convinced of the company ’ s economic viability . Selling to them means the firm gets handed off to people who know its strengths , weaknesses and goals . They know where investment is needed and are best equipped to protect the legacy you ’ ve built .
Even better , your management team already has established working relationships with the company ’ s customers and suppliers . On balance , it makes for the smoothest transition .
But this isn ’ t the right option for owners who ’ ve been keeping secrets . The key to success for this type of sale is that the management team has to be fully integrated with the founder . The books have to be open and managers must have clear knowledge of the company ’ s assets and liabilities .
ii ) Sell to a Competitor – This can be a hard move to get on board with , but sometimes it ’ s the right choice .
A competitor will want to buy you out for some combination of these four reasons :
• They want to expand , and buying your company is the fastest way to do that , because they take over servicing your customers ;
• They want access to proprietary technologies , patents , distribution networks , or licensing you ’ ve developed ;
• They want to hire away key employees who currently work for you and acquiring your firm speeds that need ; or
• They want to eliminate competition by putting you out of business .
While reasons one through three are strong motivators , reason number four is generally the strongest , which makes it hard for a business owner to move forward with this type of transaction . Worse , you can walk away from the bargaining table believing the buyer has conceded to leaving operations as they are , and then find out he ’ s fired all your prized employees a month later .
Tough medicine . But the reality is that once a company changes hands , it ’ s fair game for the new owner to do things his own way .
On the bright side , these competitive buyers are most likely to give you the best price for your company . When the cash to fund your retirement dreams hangs in the balance , it ’ s best not to get sentimental .
iii ) Sell the company to a third party – Simply selling to strangers is the right choice for owners who truly believe they ’ ve taken their business as far as they can , or that it needs
16 HOT RUSSIAN BRIDES ® - MEN ’ S LIFESTYLE MAGAZINE