PASSING THE FAMILY BUSINESS TO THE NEXT GENERATION - IS IT THE BEST CHOICE?Written by Dave Kauppi
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Are your heirs even capable of running your business? Have you held on to reins so tightly that kids involved in business have not been able to develop their decision-making or leadership skills? Do they command company respect because of their personal strength and skills or are they grudgingly granted respect because they are child of owner? If that is case, odds are not good for them taking over when you retire. Another big challenge is trying to balance fairness in employing many children or even grandchildren in a family business with various skill levels, compensation levels and ownership levels. The jealousy and in fighting can absolutely grind company’s progress to a halt. The business owner must make some difficult decisions when he or she decides it is time for them to retire. Why did I create this business? Was it to keep this business in family for generations or was it to provide for my family for generations? If desire and capability of children are not evident and company is large enough, it may be right decision to first get outside board members actively involved as step one. Step two would be to hire professional management to run business. A second alternative is to sell company while you are still running it and it can command its highest value. If you have children that want to remain in business for immediate future, incorporate that into sale agreement with employment contracts. Another way to think of it is, while I am running business, best ROI is to keep bulk of my net worth invested in this company. If I am no longer running company what is best risk reward profile for my net worth? Would my heirs be better off if business was sold and value converted to financial assets?
Dave Kauppi is a Merger and Acquisition Advisor with Mid Market Capital, Inc. MMC is a business broker firm specializing in middle market corporate clients. We provide M&A and divestiture, succession planning, valuations, corporate growth and turnaround services. Dave is a Certified Business Intermediary (CBI), a licensed business broker, and a member of IBBA and the MBBI. Contact (630) 325-0123, davekauppi@midmarkcap.com or www.midmarkcap.com.
| | The Magic of DesignWritten by Melody Foster
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Small space decorating is fast becoming a favorite topic for many people as real estate prices rise. Think priorities when it comes to small spaces. Do you need to use an area of room for more than one reason? In some cases you can easily convert kitchen table to your workspace provided you have cabinet space handy for supplies. A chest of drawers can easily serve this purpose by holding office supplies, linens, or even computer components. If you are considering utilizing services of a designer, do your homework. Check their portfolio and references. Find out how they are to work with, did they deliver on time, were they easy to work with and did they listen to homeowner. If you get an affirmative answer on all of these and their fees are suitable to your budget, then take leap. Often, interior designs services are provided at no additional cost to you, and will give you extra edge you need to create exactly feeling you want for your home. A great designer can make recommendations you may not have thought of. Ultimately, their goal is for you to be ecstatic with what you were able to accomplish together. After all, you are one that has to live in space long after designer has done their magic.
Melody Foster is the proprietor of The Cozy Home. The Cozy Home recently received the award for Best Interior Design for 2004 from the Parade of Homes and Salt Lake Home Builders Association for homes in the $400,000 - $700,000 range. mfoster@speakeasy.net
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