Sustaining the Family Business: An Insider's Guide to Managing across Generations

Sustaining the Family Business: An Insider's Guide to Managing across Generations

Sustaining the Family Business: An Insider's Guide to Managing across Generations

Sustaining the Family Business: An Insider's Guide to Managing across Generations

Synopsis

From the local dry cleaner to the nation's largest to breweries, family businesses make up 90 percent of the fifteen million businesses in the United States. Yet only one-third make it to the second generation, and 10 percent to the third, because owners -- tempted by lucrative offers -- cash in to ensure the financial security of their children. In Sustaining the Family Business, Marshall Paisner celebrates the unique qualities of the family business, and offers a comprehensive resource for successfully managing the enterprise across generations. Drawing from his own extensive experience, new primary research, and examples of family businesses in a wide range of industries, Paisner offers practical recommendations for handling conflict, establishing professional management structures, setting long-term goals, developing tax and estate strategies, and preparing heirs to take the reins.

Excerpt

Not long ago, on the lush greens of a Florida golf course, I met a man most Americans would envy. Jack had started a freight-forwarding business in the Midwest during the 1960s. He'd entered the business at an opportune time for trucking: Railroads were in decline and the federal government was pouring millions of dollars into improving the interstate highway system. By working long hours, taking risks, and making some savvy business decisions, Jack earned a lot of money. At the same time, he and his wife raised three children and sent them to college. They happily paid their hefty tax bills every year and contributed both time and money to several civic organizations in their community. Jack's business provided employment and benefits for dozens of people, and two of his three children joined their father's company when they reached adulthood.

Shortly before I met Jack, a competitor approached him with an offer to buy his business for $15 million. His lawyer, accountant, and friends thought this was an offer to seriously consider, since trucking is a regulated industry and Jack was concerned about how his business would fare in the future. He discussed the situation with his banker, who suggested that before he accept the offer he talk to the bank's investment-banking division. Officials there brought in a public company looking for successful small businesses; the company offered $30 million for Jack's business. The offer was partly in cash and partly in stock but nevertheless way over the market value of the business. Since Jack calculated the book value of the business at around $9 million and the terms of the sale included fiveyear consulting contracts for both his sons, he thought the offer was too good to refuse. His wife and children agreed. He and his wife could enjoy their retirement without business or financial worries, and their children's jobs would be secure.

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