BUSINESS PLANNING
Succession Planning for Family-Owned Businesses in the San Francisco Bay Area
Fact: Approximately 90% of the 15 million businesses in the United States are owned and managed by families. These businesses account for much of the gross national product.
Fact: More than 150 of the Fortune 500 companies are actually owned and managed by families.
Fact: More than two-thirds of family-owned businesses do not make it to the next generation.
Why You Need to Plan for the Future
The family-owned business is unique because of the blood relationship among the members. This common bond often creates a competitive edge, which manifests itself in a solid sense of direction and purpose.
However, bringing the next generation of children or even siblings into the family business can have disastrous consequences.
Petty disagreements regarding business decisions and non-business decisions among new members and old members may lead to distrust and discord.
Instead of operating as a dynamic synergy, making the business productive, the family business becomes saddled with feuding camps.
This is one of the primary reasons why the average family-owned business only lasts for 24 years. Even worse, only 30% of family-owned businesses actually make it from the founding generation into the next one.
Myers Urbatsch P.C. Can Help
In order to prevent such bleak outcomes for our clients, we offer business and succession planning services especially for those who own family businesses.
Many of the two out of three family businesses that do not make it to the next generation fail due to two key elements: (1) poor estate and tax planning; and (2) profound changes in the economy. We at Myers Urbatsch P.C. think this is a powerful piece of information.
We would like to share our experience with solutions to the business-succession hurdle with our clients. We cannot control the economy but we can be proactive with good estate and tax planning so that the family business can be passed to the next generation.
What We Do
Among the issues we can help you address in a business plan include:
- Establishing proper management for the family business.
- Preventing future generations from treating the family business as a personal piggy bank.
- Directly addressing potential marital problems so that the buy-sell agreement keeps ownership of the family-owned business in the family.
- Creating a succession plan so that children who are not actively involved in the business do not hold an interest in it. Also, if more than one child holds an interest in the family business, then one should be designated as the sole decision maker and an extrajudicial procedure employed to address disputes.
- Providing for minority shareholder rights and remedies.
- Establishing a board of directors made up of family members.
- Establishing a requirement that shareholders hold meetings. This is to facilitate communication so that conflicts among family members do not become destructive.
