5. Do we need to involve other professionals?
Even the most experienced financial advisor may not have all the answers to help a family business navigate the legal, tax and emotional issues involved. A good advisor will recognize when other experts may need to be brought into the process. Business valuation experts, attorneys, mediators and other experts can be important members of the advisory team and having a vetted network of outside professionals on call is invaluable. When handled properly, family-business succession planning can be a smooth and seamless process that keeps family relationships close during the transition and long into the future.
A Happy Ending
Take, for example, a family-owned masonry business client. The father established and operated the business, and only one of his three children worked in business. As part of the financial plan, the father wanted to ensure that his wife and two other children would be taken care of upon his retirement or death. He was not certain if the son who worked in the business wanted to run the company after the father retired. As the financial advisor, we established open communication lines among all family members, and determined that the son did not want the responsibility of running a business and was content keeping his position and getting paid out like his siblings. We discussed succession and exit options, and as a family, they decided to sell the business internally. They identified their top successors, determined their level of interest and whether or not the potential buyer was a good fit to take over the family business. We brought in other professionals from our network, including business valuation specialists, corporate and estate planning attorneys and accountants, to help facilitate the sale of the masonry business. Subsequently, we worked with each family member to develop a financial plan based on his/her individual goals, resources and risk tolerance. The internal sale was ultimately successful. The son continued to work in the business until his retirement a few years ago. The father has since passed away, but because of the plan we helped put in place, his beneficiaries have been taken care of. The best part was that the family remained close, because we were able to help prevent conflict by taking as much uncertainty as possible out of the equation.
Laurie Ingwersen, CFP, CRPC, CDFA, CBC, is a managing partner and senior wealth management advisor at The Harvest Group. She was recently named an Outstanding Woman of Family Business by the Family Business Association