The Group Throne

The Group Throne
by Ira Bryck

Two brothers listened intently to the compelling words of their dear, departing father. “You both worked very hard in our family business. You did your jobs well and you each struggled to show me how you could lead this company one day. Sorry, but I just couldn’t pick one of you above the other. Finally, I’ve made my decision. I want you to both be presidents…Co- Presidents. But listen up: if and when you can’t agree, when you’re in absolute deadlock, call my brother Michael in California. I know you never liked him, but he’s a smart guy. He’ll listen to both sides, and then decide.

No surprise that these two leaders strove to cooperate ceaselessly, never wanting to gamble on the uncertain pronouncements of Uncle Mike.

It is quite a challenge to run any business. What makes a family business even more intense is that your business partners have notions about you (and you about them) formed in the Wonder Years, that just won’t quit. They can’t see how you’ve grown…and maybe you haven’t…because of the box they’ve placed you in. More…

Protecting Seniors’ Interests in a Business Transition

PROTECTING SENIORS’ INTERESTS IN A BUSINESS TRANSITION

Peter Berenson, CPA, PFS

Forman, Itzkowitz, Berenson & LaGreca

For seniors, transitioning their business to the next generation can be, in some ways, like teaching their child to fly from the proverbial family nest to independent adulthood.  During the growth and developmental years of both the business and the child, seniors typically nurture both with love and money and build emotional bonds.  Then, when they contemplate separation from each, the senior/father begins to assess the related risks.

Understanding business transition risks and how to protect against them requires a brief overview of the two basic transition types: management control and stock ownership.  These can occur simultaneously or independently, and gradually or instantly.  In other words, seniors can transfer daily and strategic management to the next generation while retaining ownership.  Or, they can transition some or all of the ownership to the next generation while retaining daily and strategic management.  Or, both types of transitions can occur simultaneously.  The major difference between the two types is that as long as seniors own more than fifty percent of their business they have the legal authority to grant and/or reclaim management control.  Once the fifty percent threshold is crossed, this legal authority is substantially diminished.  Nonetheless, while the degree of risk may differ with either type of transition, the nature of the risks is the same. More…