Succession Planning Makes Transfers Seamless
By David Ciambella
32
2016 Issue 2 | THE SCORE
There have been numerous articles published in recent years on the incredible amount of wealth to be transferred from generation to generation in the next few decades . In addition to the massive wealth scheduled to transfer , the leadership position in many family businesses is scheduled to transition in the next few decades as well . Many of these businesses will transfer from a single controlling shareholder , such as a patriarch or matriarch , to multiple children , some of whom are active in the family business and some who are inactive .
Oftentimes the transfer of stock in a family-owned business is accomplished via estate planning wherein parents endeavor to treat all of their children equally . Sounds logical and reasonable , don ’ t you think ? The net result of this good intention is that siblings are thrust into a forced partnership under the assumption they will work things out , make the best of it and remain close as a family . Unfortunately , this is wishful thinking . The truth is , there is more than meets the eye when it comes to perpetuating your family business and preserving family relationships and family harmony .
So what are some of the implications associated with transferring your Buffalo Wild Wings ® franchise , or potentially other concepts you are invested in , that have been under the control of a single individual to the next generation where more than one family member inherits stock ? Wow , what a loaded question ! There are endless issues and questions regarding this topic that merit consideration , analysis , debate and , ultimately , reaching reasonable conclusions . Let ’ s take a look at some of the questions franchisees have asked over the years .
• Should my children work together or should I divide the stores ( or other concepts ) among my children ?
• Should passive family members own stock in the operating company ?
• Should actively involved children receive stock in the operating company and inactive children inherit other assets ?
• Which child should I pick to be my successor ? What criteria should I use to make my decision ? How do I deal with the child not selected ?
• Who should inherit the controlling interest in my business ?
• Should actively involved children have the ability to purchase stock from inactive siblings who inherit stock ? If so , at what price ? What terms ?
• How should compensation be determined for actively involved family members ?
• How long should benefits ( automobile , insurance , cellphone , gas , etc .) continue for family members ?
• What if one child wants to grow the business and one or more siblings do not ? Should growth be stagnated ? Or should the ambitious child be able to purchase more stores ( or diversify into other concepts ) and own them individually ?