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unHeritage – 11 Pitfalls to Family Legacy and How to Avoid Them
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Center for Family Conversations
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THE TYCOON PLAYBOOK – How Business Empires Are Built
The Tycoon Playbook course was created for business families who are already running a successful business and wish to ramp up their growth while preserving wealth for future generations. Specifically, the Playbook teaches high performance business owners the two most highly rewarded skills in business, namely deal-making and how to acquire cash flow producing business assets.
Post Tagged with: "Family business"
Five steps that will keep a family business alive—and entrepreneurial—for generations.
Children can now work in family business – The lack of any clear definition of “family” has child rights activists worried. If the law doesn’t clearly define ‘family’ then the fear is this exception being used as a loophole.
Working with family members: yes or no, and why?
The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising youn
Family-run companies need structure and careful planning. Your relationships and success depend on it.
Made in Germany Deichmann A Family Business In Germany the name Deichmann is synonymous with affordable footwear for the entire family. Heinz-Horst Deichmann gave up his orthopedic practice in 1956 to take over the family’s shoe business. Now Europe’s largest shoe retailer, with sales of over $6 billion in 2013, Deichmann-Schuhe SE also owns Rack Room Shoes and the Off Broadway chain in the U.S. Deichmann serves as co-chairman of the company’s administrative board, while his son Heinrich heads the company. The family doesn’t like being recognized as billionaires, because they live a relatively modest existence and think of their fortune as providing a mandate for social responsibility rather than a means for personal benefit. In addition to providing employees with generous benefits, they support various missionary and humanitarian causes including a program to help leprosy victims in India–a country Heinz-Horst has visited frequently. His social and charitable work earned him the Martin-Luther Foundation’s “Luther Rose” award.
The New EBITDA: Emotions Before Interest Taxes and Depreciation by Tom Deans, Ph.D. Sitting in the departure lounge at LAX, I couldn’t help but overhear a conversation between an investment banker and his younger associate. I learned two things. First (and most business travelers can relate), it is amazing how cavalier people are about discussing confidential details in public places. The second confirmed something I had been thinking about family businesses for some time. The older of the two bankers was whining about how he thought the slam-dunk deal they had just presented was now probably never going to happen. On and on he grumbled about the time he had spent running the numbers, lining up partners and generally bringing the deal to a crescendo, only to have the business owner change his mind about selling. The investment banker was completely perplexed about why the offer, the numbers, the multiples that looked so good weren’t enough to entice the owner to do the deal of a lifetime. It took everything I had to stop myself from leaping into the conversation and selling him a copy of Every Family’s Business (it wouldn’t have been the first time). But I exercised extraordinary restraint and settled back and listened to him talk about the clever structure of the deal, the tax that could have been saved and the instant wealth the owner would have secured if only he had been smart enough to take the deal. Emotions are Squishy – Not the Stuff of Deal-Makers in Suits The funny thing about listening in on a conversation is that the longer you listen the harder it is enter the conversation. So I bit my tongue and instead simply wondered how many other business brokers, M&A professionals and investment bankers expend such effort trying to bring deals to fruition only to have sellers back out. I wondered how an entire industry of intermediaries could so badly underestimate the emotional connection that owners have to their businesses, and also fail to understand how these emotions can scupper so much good work and extraordinary planning and lead the owner to ultimately destroy the business’s value. When really bright finance experts hear the word “emotions” you can so often see their eyes roll back and the calculators shut off. Yet students of the greatest financiers of all time – deal-makers like Warren Buffett – know that these people get deals done by running the numbers and then engaging business owners in the one corner of their life where most number crunchers don’t go – their family. It is the rare rainmaker who has both the left and right brain firing on all cylinders. Warren Buffett Buffett and other great deal-makers know that the sale of a business will typically result in a “liquidity event” that will leave owners with more wealth than they feel comfortable consuming. Most business owners accumulate wealth precisely by denying themselves consumption. Sellers will often kill deals, blaming a low bid price, […]
Building a Family Business that Lasts Dr. Joseph H. Astrachan, Executive Director of the Cox Family Enterprise Center at Kennesaw State University, speaks on on the topic of Building a Family Business That Lasts and provides viewers with four key points to walk away with.
A Family Wired For Perpetual Dependence by Tom Deans, Ph.D. When the sale of a family business is all about a founder becoming wealthy and their children losing their jobs, you can see why so few ever put themselves in play and sell. The CEO – the Chief Emotional Officer (Mom, and increasingly Dad) – just can’t stand to see the family pull itself apart. Killing the business with love has always felt like a better plan. With a wave of aging business owners trying to figure out how they’ll fund their retirement, you can understand the temptation to simply throttle back on their day-to-day involvement and draw a salary while Junior runs the business until the final curtain falls. Of course, as I’ve discussed in previous articles, with owners living longer, it’s improbable that Junior is going to hang around the business into his or her 70s, when Mom and Dad finally reach their 90s and hand over the reins of control – not operating control, I mean real control, control of the voting stock transferred when the last parent dies. How About an Exit Where Everyone Makes Money? But what if an advisor could frame the exit of the controlling shareholder as the day when all family members become wealthy? Far too often, death is the triggering event for the transfer of stock. Few children are offered an opportunity to risk their capital to buy the stock of their parents’ business at an early age. I recommend that when a child is 14, the parents and advisors begin the process of implanting the idea that the family business will be bought, not gifted, and that employment is different from ownership. For a variety of reasons, the majority of parents signal that there’s no real or pressing need to recycle dollars in the family: “Hang around long enough, Junior, and all this will be yours – for free.” Of course we know that nothing is ever really free and that while the ownership question is left hanging, there are as many underpaid children working in family businesses, as there are overpaid children. My experience on the speaking circuit is that few overpaid children ever risk their capital to buy out their parents. Why derail the gravy train? Parents who use their business to purchase and control family harmony do more harm than good and always pay the greatest price of all – a family wired for perpetual dependence. Family Business Math The dysfunction around the issue of compensation percolates and festers because the stakes have always been high. When Junior complains about low wages, some parents simply say, “If you don’t like what you’re paid, leave.” Emotionally and financially, it’s never been easy for a child to quit a parent’s business. Child Quitting Over Compensation + Aging Business Owner = Less Inheritance For Junior. You can see how family business math becomes really interesting when only one child working in […]
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