In his book, Every Family’s Business, one of my colleagues, Thomas Deans PhD., talks about the 12 Common Sense questions every family business needs to ask itself to truly protect its wealth. I highly recommend that everyone read this book. Furthermore, if you have a chance to see Tom Deans speak, I strongly suggest that you attend since you will leave the meeting with many wonderful insights.
A Sample of The 12 Key Questions are as follow:
1) What does our business look like in 5 years? This question should be answered by both the Owner and the person taking over the business.
2) Are you interested in selling your stock? If yes, to whom? This should be answered by the Owner and the person taking over the business if they own stock.
3) Are you interested in buying stock and acquiring control? This should be answered by whomever is taking over the business.
4) Do you understand and agree that in the interest of maximizing shareholder value, this business can be sold to a third party at any time? This question should be answered by the Owner and whomever is taking over the business.
5) I agree that within the next 60 days I will put in place a special compensation formula for my child/key employee in the event that the business is sold in the next five years? This question is answered by the Owner.
6) As a fundamental principle I understand that from time to time we will receive unsolicited offers from third parties to acquire the business. These offers will be considered and accepted at the discretion of the controlling shareholder and supported by whomever was thinking of taking over the business. This question is answered by the Owner and whomever is taking over the business.
7) I will arrange for an updated valuation of the business and I will calculate whether there is an appropriate amount of insurance in place. I will furnish evidence that this has been done and that estate taxes will not impair the ability of this corporation to function after my death. This question is answered by the Owner.
For the remaining questions, and for Tom’s incredible insights, please buy this great book.
