Family-Owned Business

Family-Owned Businesses Why are we focusing on them? Why are we focusing on them? Mission Statements Mission Statements Two types Two types Young people and parents Young people and parents Married couples Married couples Women-controlled Women-controlled

Family Interactions Cooperation Cooperation Conflict Conflict Incompetent Family Members Incompetent Family Members Compensation Compensation

Family Limitations Organizational Structure Organizational Structure Filling Positions Filling Positions Outside Managers? Outside Managers? Divorce Divorce

Culture & Resources Culture Culture Resources Resources

Preparing the Next Generation Will children take over? Will children take over? Two factors Two factors Part-time v. Full-time Part-time v. Full-time Entry-level v. Higher-level Entry-level v. Higher-level Guidelines Guidelines

Preparing for Succession Two rules Two rules Plan early Plan early Carefully groom successor Carefully groom successor How to Choose Between Kids? How to Choose Between Kids?

Preparing for Succession Sudden Departure Sudden Departure Planned Departure Planned Departure Selling to Family Members Selling to Family Members Selling to Outsiders Selling to Outsiders Transitional Concerns Transitional Concerns

Tax & Estate Planning Tax Planning Tax Planning Estate Planning Estate Planning What is it? What is it? What can it do? What can it do? How can a company’s value be determined? How can a company’s value be determined? Buy/Sell Agreements Buy/Sell Agreements

Estate Planning Issues Issues Reduce taxes Reduce taxes Retain control of business Retain control of business Maintain flexibility of operations Maintain flexibility of operations

Reducing Taxes Gifts to Family Gifts to Family “Present interest” “Present interest” Between spouses Between spouses Lifetime maximum Lifetime maximum Fair market value Fair market value Establish a Family Limited Partnership Establish a Family Limited Partnership Sell Stock to Children Sell Stock to Children Source of income to pay Source of income to pay Capital gains taxes Capital gains taxes Establish a Living Trust Establish a Living Trust Advantages/ Disadvantages Advantages/ Disadvantages