Valuing the Family Business

Valuing the Family BusinessNortheastern University

Family Business Quarterly
by Chris M. Mellen, ASA

Paul Phoenix, successful owner of Phoenix Electronics, Inc., sees the potential for growth in his company, but needs additional funds to finance that growth. He currently holds a 75% interest in Phoenix, with his brother owning the remaining 25%. Paul has given consideration to gifting some shares to his children, as well as to establishing an employee stock ownership plan (ESOP). However, he has been approached by several interested investors to buy equity in Phoenix Electronics. Banks have also expressed a willingness to loan him additional capital. As a result, his advisers have suggested that a formal appraisal of the business would be needed to address all these situations. More…

Life Disposition of the Family Business

Life Disposition
of the Family Business

Succeeding Generations
Fall, 1996

by Barbara Gill, CLU, ChFC, CFBS
& Dale J. Seymour, CLU, ChFC, CFBS

Seymour and Associates

Retiring from the family business?What does one do?Sell to other family members?Sell to an outsider?Perhaps retain the family business and gift portions annually to other family members.What about an installment sale or private annuity?Is an ESOP an alternative?What about charitable remainder trust?How does one structure the deal so that the buyer can afford to buy and the seller can afford to retire?Fortunately, there are many creative planning opportunities available to assist the family business owner who desire to create an exit strategy.Planning in advance becomes the key.

Without question, there are many choices to be made regarding business transfers during a lifetime.One option the family business owner always struggles with is whether or not to sell the family business to family members or an outside third party.In the event of structuring a sale with family members, several particular questions should be addressed. More…